European Union foreign ministers have announced a ban on the import of Iranian oil. The new oil sanction against Iran prohibits any new deals and calls for existing contracts to be stopped by July this year.
European Union nations formally adopted an oil embargo against Iran on Monday, as part of its latest set of sanctions against President Mahmoud Ahmadinejad's government.
Foreign ministers from the 27 member states had gathered in Brussels to discuss the proposed measures, which are a reaction to concerns over Iran's nuclear program.
British Foreign Secretary William Hague said that the oil embargo was part of "an unprecedented set of sanctions" against Iran.
"I think this shows the resolve of the European Union on the issue," Hague said.
> Map of Iran
According to information from diplomats, EU countries will not be permitted to sign any new oil deals with companies in Iran, while existing supply contracts will have to be shut down by July 1, 2012.
As expected, the assembled ministers also agreed to further measures targeting Tehran's central bank and a ban on buying and selling petrochemical products, gold, precious metals, diamonds, banknotes and coins.
Invitation to negotiate
German Foreign Minister Guido Westerwelle said that if Iran were to build up its atomic arsenal, it would "not only pose a threat to the region, but also to the rest of the world."
"These sanctions can be ended at any time by Iran, if there is international cooperation, if Iran ensures transparency and thereby makes clear that a nuclear weaponization of Iran is not being sought or can be ruled out," Westerwelle said.
EU foreign policy chief Catherine Ashton said she hoped the pressure of the sanctions would "result in negotitations."
"I want to see Iran come back to the table and either pick up all the ideas that we left on the table ... last year ... or come forward with its own ideas."
Iran has indicated its willingness to hold talks with Western powers, although there have been mixed signals on whether such negotiations would actually go ahead, given the conditions imposed by either side.
The move was welcomed in Washington, where US Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner issued a joint statement describing it as "another strong step in the international effort to dramatically increase the pressure on Iran."
However, Russia expressed criticism of the new sanctions.
"These unilateral steps are not helpful," the Interfax news agency quoted Foreign Minister Sergei Lavrov as saying. "We will restrain ourselves from hasty actions, we will work for a renewal of talks."
Not surprisingly, Tehran's reaction to the announcement was similarly negative.
"The more they move towards the direction of sanctions, the more hurdles will be created for the settlement of the nuclear dispute," Iran's Deputy Foreign Minister Abbas, Araqchi told the official IRNA news agency.
Key source for the south
Iran is a major oil source for the European Union, especially for southern members like Greece, Spain and Italy. The cash-strapped government in Athens had repeatedly requested time to find alternative suppliers, having managed to strike some favorable terms and conditions with Iran. European negotiators were seeking help on this front from Saudi Arabia, and hopefully Libya once the war-torn country's oil production starts to ramp up again.
Oil accounts for roughly 90 percent of all Iranian exports to the EU, and Europe is Tehran's second largest market after China. Oil makes up over three-quarters of Iran's total economic output; the country sells roughly 2.5 million barrels every day.
The fresh round of sanctions follows a report from the UN's nuclear watchdog, the International Atomic Energy Agency (IAEA), published last November, warning that Iran might be getting closer to constructing nuclear weapons. Western countries suspect Iran is seeking atomic bombs, but Tehran says its nuclear program is only meant to provide energy.
Threat is met with resolve
Iran has also repeatedly threatened to close of the strategic shipping route through the Strait of Hormuz in response to increased western pressure. The Pentagon announced on Sunday that the US aircraft carrier USS Abraham Lincoln had passed through the Strait and was patrolling the Gulf in a "regular and routine" transit. British and French ships were also deployed.
Late on Monday German Chancellor Angela Merkel, French President Nicolas Sarkozy and British Prime Minister David Cameron issued a rare joint statement in which they expressed their resolve that they would "not accept Iran acquiring a nuclear weapon," and calling on Iran to suspend its nuclear program "immediately."