International Atomic Energy Agency inspectors will go to Tehran this month to discuss Iran’s nuclear program, two diplomats with knowledge of the talks said, as Europe seeks agreement on an embargo on Iranian oil imports.

The Vienna-based United Nations nuclear watchdog agreed to the meeting with Iranian government representatives to be held at the end of January, the diplomats said today on condition of anonymity because the negotiations are continuing. One sticking point is whether the IAEA will allow Iran to study intelligence that indicates that some of its atomic work has a military purpose, according to one of the diplomats.

A European Union embargo on Iranian (OPCRIRAN) oil will probably be delayed for six months to let countries such as Greece, Italy and Spain find alternative supplies, an EU official with knowledge of the talks said yesterday. Crude oil prices dropped on the news. France, Germany and the U.K. have been pushing for the step to increase pressure on Iran over its nuclear program.

Iran is “probably hoping to use talks as a delaying tactic, and to raise the hopes of those in the international community who think that negotiations can resolve the issue,” said Michael Singh, a former official on the U.S. National Security Council, who is now at the Washington Institute for Near East Policy. “All the signals from the Iranians are not that they’re now willing to negotiate an end to their nuclear program, but that they’re not.”
Oil Falls

Crude oil for February delivery fell 13 cents to $98.97 at 11:05 a.m. London time in electronic trading on the New York Mercantile Exchange, heading for its biggest weekly decline in a month. The contract fell $1.77 to $99.10 yesterday, the lowest close since Dec. 30. Futures have lost 2.3 percent this week.

Citing unidentified sources it said were “credible,” the IAEA reported in November that Iranian work toward a nuclear weapon continued until 2010. Iran, the second largest producer in the Organization of Petroleum Exporting Countries, has maintained that its nuclear program is to generate power.

Iranian Vice President Fereydoun Abbasi traveled to Vienna in June to personally invite IAEA Director General Yukiya Amano to visit the Persian Gulf nation. Iran withdrew the offer in November after the IAEA released its report citing documents that showed work “on the development of an indigenous design of a nuclear weapon including the testing of components.”

Iran has alleged that documents in the IAEA’s possession are forged. The government has in the past refused to address the nuclear-weapons allegations until it is allowed to examine the evidence being used against it.
Eni Debts

The European oil embargo, which would need to be accepted by the 27-nation bloc’s foreign ministers on Jan. 23, also is likely to include an exemption for Italy, so crude can be sold to pay off debts to Rome-based Eni SpA (ENI), Italy’s largest oil company, according to the EU official, who declined to be identified because the talks are private.

A ban on petrochemical products would start sooner, about three months after EU ministers agree to the measure, the official said.

“Work by experts from the 27 member states is in a very intensive phase,” Maja Kocijancic, a spokeswoman for the European Commission, said by phone yesterday from Brussels. “They are looking into different options for restrictive measures with a view to adoption on Jan. 23.” She declined to comment on possible phase-in periods or exemptions.
Most Dependent

Phasing in the European embargo would satisfy the concerns of nations most dependent on Iranian oil, including Italy, Greece and Spain, the EU official said. Those three nations accounted for 68.5 percent of EU imports from Iran in 2010, according to European Commission data.

Amid the European discussions, President Barack Obama’s administration has sent teams worldwide to consult with countries on managing the supply and demand of oil, according to an administration official who briefed reporters yesterday in Washington.

The teams are part of the administration’s efforts to implement Iran sanctions mandated in a law Obama signed on Dec. 31. The law would cut off foreign financial institutions that knowingly facilitate significant transactions with the Central Bank of Iran. The U.S. intends to close down the bank, the U.S. official said.
Diversify Sources

The U.S. goal is to convince countries that Iran is no longer a reliable source of oil, a strategy that already is paying off as countries that deal with Iran have difficulty getting their financing guaranteed and as nations such as China and India seek to diversify their sources, according to the official, who wasn’t authorized to speak on the record.

Iran pumped 3.58 million barrels of crude a day last month, according to Bloomberg estimates.

The Iranian government said in a letter to United Nations Secretary General Ban Ki-Moon that a civilian nuclear scientist, Mostafa Ahamdi Roshan, who was killed by a bomb yesterday was the fourth victim of a foreign terror campaign.

Tensions over the ratcheting up of sanctions led Iranian Vice President Mohammad Reza Rahimi to threaten on Dec. 27 that Iran may block the Strait of Hormuz, the transit for about a fifth of the world’s oil, if the EU goes ahead with an embargo.

To contact the reporters on this story: Jonathan Tirone in Vienna at [email protected]; Thomas Penny in London at [email protected]

To contact the editor responsible for this story: Alan Crawford at [email protected]

Source : Bloomberg