Iran in Talks to Sell Oil to Egypt to Help Offset EU Loss

Iran is in talks to sell oil to Egypt , officials on both sides say, part of a broader push to make up for lost European Union sales and a renewed engagement between the two countries.

Tehran has approached Cairo to sell 2 million barrels--worth over $200 million--that are part of a stock of Iranian crude stuck unsold in the Egyptian port of Sidi Kerir because of international sanctions against Tehran , one person familiar with the approach said recently.

An Iranian oil official said the two sides have held talks on the matter.

"Between Iran and Egypt , there is some discussion. There is the idea they [will] import some oil from Iran ," the official in Tehran said recently. He declined to be named because the talks are confidential and no deal has been finalized.

Egyptian Oil Minister Osama Kamal told the state-run Al-Ahram newspaper last week that Cairo has "no objection" to importing and refining Iranian oil. He spoke after Egypt 's new president, Mohammed Morsi, attended a summit of the nonaligned movement of nations in Tehran last month.

His visit was the first by an Egyptian leader in decades.

Tehran cut ties with Cairo after its Islamic revolution in 1979 because of Egypt 's peace accord with Israel . Iran has not delivered any oil to Egypt in the 33 years since.

Iranian leaders supported the 2011 uprising that brought Mr. Morsi, an Islamist, to power.

Iran badly needs new oil buyers after a European Union oil embargo and U.S. pressure on its Asian clients more than halved its crude exports to 900,000 barrels a day.

The West has stepped up sanctions against Iran , alleging new evidence that Tehran is developing nuclear weapons. Iran says its nuclear program is for peaceful purposes like generating electricity.

With just 709,000 barrels a day consumed each day according to BP PLC's authoritative statistical report, Egypt is a relatively small oil consumer, making it unable to replace Tehran 's lost oil sales on its own.

And it remains to be seen if it could ever agree to make a move as sensitive as buying Iranian oil. "It's very preliminary. It has not been finalized," the Iranian oil official said.

Such a move would surely anger Washington , possibly imperiling Egypt 's ties with the U.S. Cairo is in talks to get $1 billion in debt relief from the U.S. , which has spearheaded a global push to isolate Iran because of the nuclear dispute.

Another element that could impede the oil talks with Iran is the situation in Syria . The new Egyptian president embarrassed Tehran recently by calling its Syrian ally an oppressive and illegitimate regime.