Summary
- Greece’s sovereign debt crisis has led most oil suppliers to decide that they cannot take the risk of trading with Greece. This includes Russia, historically Greece’s largest supplier. This crisis has driven Greece both to draw down its oil stocks and to massively increase its reliance on Iran.
- As such, Greece is now the potential weakest link in the European Union’s (EU) plans to embargo Iranian oil imports; unless Greece finds alternative suppliers that are willing to trade with it on terms it can afford, it will not be able to comply with the embargo without running out of oil.
- If Greece begins to lobby to water down the EU embargo, it could easily be joined by Iran’s other major European customers—Italy and Spain. As such, policymakers may wish to consider how the EU could guarantee Greece’s oil payments in order to enable it to access a wider range of suppliers.
- Although the United States has now exempted EU countries, including Greece, from sanctions, this is merely a reward for the EU promise to cease imports by July—a promise that Greece may be unable to honor.
