European Union diplomats say they have reached a preliminary agreement to ban imports of Iranian oil, a move that has been welcomed by the United States.
French Foreign Minister Alain Juppe said on January 4 that details could be resolved before the EU foreign ministers meet in late January.
"We have a foreign ministers meeting on January 30 and I hope we will be able to make the decision on the embargo of oil and gasoline from Iran," Juppe said. "We're working on the measures and things are looking good."
Michael Mann, spokesman for EU foreign-policy chief Catherine Ashton, told RFE/RL on January 5 that finding alternative oil sources is the key to finalizing an embargo.
"There have been issues, obviously. It has not been a straightforward thing. There are certain countries that obviously get a lot of supplies from Iran, and therefore, they would have to find alternative supplies," Mann said.
"And we are, of course, in times of austerity. So this thing needs to be carefully thought through."
The United States and other Western countries have already imposed economic sanctions against Iran, and there are four sets of United Nations sanctions to punish Tehran for allegedly trying to develop nuclear weapons.
Iran denies the allegations, saying its nuclear program is for peaceful civilian purposes.
With more than 50 percent of Iran's state income coming from oil exports, an EU embargo would increase pressure on Tehran. More than 17 percent of Iran's oil exports now go to EU countries.
In response, Iran accused the West today of waging "an economic war" against the country.
Economy Minister Shamseddin Hosseini told the IRNA news agency that "the enemies of the Islamic republic's regime” have not “been able to chain the nation and now they want to chain the economy."
Iran's national oil company downplayed the impact of an EU embargo, saying it will sell oil to Asian countries like China and India. But oil-sector analysts say Tehran will have to sell oil at lower prices to Asian clients.
In Washington, U.S. State Department spokeswoman Victoria Nuland said the EU agreement was "the result of lots of consultations."
"These are the kinds of steps that we would like to see not just from our close allies and partners in places like Europe, but from countries around the world," Nuland said, "because we do believe that this is consistent with tightening the noose on Iran economically and we think that the place to get Iran's attention is with regard to its oil sector."
Nuland said U.S. Treasury Secretary Timothy Geithner would go to China next week to discuss "coordination" over new U.S. sanctions against Iran's Central Bank.
Meanwhile, Tehran has announced more military exercises in the Strait of Hormuz -- a vital international oil-shipping route. Earlier this week, Tehran threatened action if Washington redeployed an aircraft carrier to the Persian Gulf or if oil sanctions were imposed.
Washington says those threats show Iran is "in a position of weakness" and the United States will not alter deployment plans in the gulf.
Written by Ron Synovitz in Prague, with Rikard Jozwiak in Brussels and news agency reports