EU Agrees to Iran Oil Embargo; Joins U.S. Sanctions

The pressure on Iran continues to ratchet up, as European Union governments agreed on Wednesday to ban imports of Iranian oil.

On Saturday, U.S. President Barack Obama signed a bill that imposes sanctions on Iran's central bank, which processes the nation's oil export payments. The measure penalizes foreign financial institutions from doing business with Iran's central bank.

The EU governments in the 27-nation bloc agreed on the Iranian oil embargo, but now need to plan a timetable for implementing the move. France has suggested setting a date for beginning the embargo at a scheduled Jan. 30 meeting of the EU foreign ministers.

The U.S. and the EU nations have accused Iran of covertly developing a nuclear program under the guise of a civilian energy program. Iran has denied the charge, and has fought back with specific threats like saying its military might close the Strait of Hormuz, a vital gobal passageway for oil tankers.

The U.S. State Department hailed the EU move, suggesting that other countries follow suit by continuing to tighten the noose on Iran economically.

The European Union collectively is one of the biggest markets for oil for Iran, while China is the biggest buyer of Iranian oil. China has criticized the U.S. move signed by Obama, and says diplomacy should be used to solve concerns about Iran's nuclear developments.

But EU nations that previously showed concern about joining the embargo, including economically troubled Greece and Spain, dropped their objection and helped the group reach full agreement.

The embargo, sanctions and threats from Iran have pushed oil prices higher in recent days. On Wednesday, Brent crude closed at a seven-week high on news that the EU had reached agreement. Brent crude jumped almost $2 a barrel on the news. Meanwhile, U.S. February crude futures were up 26 cents to $103.22 a barrel -- the highest since early May.

Some experts think the embargo may yield oil discounts for those countries that continue buying from Iran, however.

India, China and some other Asia countries may end up getting a reduced price on Iranian oil and that could be good for their economies, but European countries will have to find other sources, said Gene McGillian, analyst for Tradition Energy in Stamford, Connecticut, according to Reuters.