The EU measures are also expected to include sanctions against the Iranian central bank and a ban on trading in gold with the government, diplomats say. "Today, markets will be watching headlines from Europe, with EU ministers to decide on a ban on Iranian crude exports,» analysts at ANZ said in a report. «Softer demand appears to be outweighing concerns over potentially tighter supplies." Banning Iranian imports will lead to consumers competing for supplies just as a steady economic revival at the world's biggest oil consumer, the United States, looks set to boost demand. On the other hand, Asia's top buyers of Iranian oil, China and India, are not likely to jump in to snap up the extra barrels from the Islamic Republic that have no takers as a result of the embargo.
China has scaled back imports in the first two months of this year as the two sides have yet to agree on the 2012 contract terms, while India is struggling to pay for the oil it buys from the Islamic Republic. "Although China and India will continue to import Iranian crude, it is far from clear they will ramp up imports to fully offset sanctions-related sales losses elsewhere,» analysts at JPMorgan said in a report. "We expect tighter sanctions to make it harder for Iran to sell its oil production, and may lead to some production shut ins." Weighing on prices against concerns over supply is Greece's debt crisis and a looming default. The euro zone finance ministers' meeting comes after private creditors said on Sunday they had come to the limits of what losses they could concede in a debt swap with the country.
Without another bailout, Greece will not be able to pay back 14.5 billion euros in maturing bonds in March, triggering a messy default that would hurt the whole euro zone economy and likely depress energy demand. "Investors are also likely to be encouraged by reports that an agreement with bond holders on a restructuring of Greek debt is close,» said Ric Spooner, chief market analyst at CMC Markets, said in a report. "However, any positive market reaction to this news is likely to be delayed until there is a formal announcement that can be relied on.» [Reuters]