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Iran feels economic pinch as it warns Moscow nuclear talks could stall

Tough Western sanctions imposed on Iran's oil market over its developing nuclear program has the country feeling an economic pinch, as its estimated to have lost more than $10 billion this year alone in oil revenues, Reuters reports.

The financial measures imposed by the US and the European Union have dropped Iran's oil output to the lowest level in 20 years, Reuters reports, as Iran is shipping out 600,000 less barrels per day than it did last year. The sanctions have made it harder for Iran to export its oil and more difficult for other countries to buy it. An European Union oil embargo is  to take effect on July 1.

"This is an act of economic warfare. The sanctions are having a big effect in cumulative terms: Iran is being locked out of the global financial system," Mehdi Varzi, a former National Iranian Oil Co. official, told Reuters.

The sanctions are brought on as Iran claims its nuclear program is for peaceful purposes, but US and European powers suspect that it's intended for weapons development. Ongoing talks over Iran's nuclear program are set to resume in Moscow on June 18.

"It does appear that Iran is more amenable to negotiations now than it was a year ago. The West should take advantage of this momentary situation to offer more meaningful concessions -- a road map to where this will all end," Varzi said.

But an Iranian negotiator warned Sunday that this month's nuclear talks in Moscow could stall because of faulty preparation.

Ali Bagheri, Iran's No. 2 nuclear negotiator, said advance talks were agreed on to clarify the agenda for the Moscow round,.

The official IRNA news agency said Bagheri made the complaint in a letter to senior EU official Helga Schmid on Sunday.

Concerned that Iran might be aiming toward nuclear weapons, the West wants to stop Iran's 20 percent uranium enrichment program. Western experts say it would not be difficult to upgrade 20 percent enriched uranium to weapons grade.

In exchange for discussing enrichment, Iran wants the West to loosen sanctions.

President Mahmoud Ahmadinejad recently said the West needs to explain what meaningful concessions it will offer to Iran in return for a halt to 20 percent enrichment.

"If some want us to forgo this right, they should first give their reasons, and secondly (disclose) what they will give the Iranian nation in return," he said.

Schmid has indicated there is no need for preliminary talks. The EU official said the six-power proposal at the Baghdad talks addresses "our key concerns on the 20 percent enrichment activities."

"The next round of talks in Moscow will be successful provided that deputies and experts are able to prepare a specific agenda on the basis of Iran's proposals and those of 5+1," IRNA quoted Bagheri's letter as saying, referring to the five permanent members of the U.N. Security Council and Germany.

"If agreements at each round of talks are not pursued by deputies and experts in an appropriate manner, what will be the guarantee for success of the upcoming talks," IRNA quoted Bagheri as saying.

The sanctions have also caused inflation in Iran to soar to 20 percent over the past six months. Its citizens are feeling the effects of the sanctions, as in the last month, prices of apples and strawberries have doubled and tripled, respectively.

"Little by little, even fruit is becoming a luxury," Ahmad, a 54-year-old fabric shop owner in Tehran, told Reuters.

Click for more from Reuters.

The Associated Press contributed to this report.

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