The European Union tightened its sanctions against Iran and laid out plans for a possible embargo on Iranian oil in response to mounting concerns in the West over the country’s nuclear programme.
At a meeting in Brussels, EU foreign ministers decided new sanctions should be drawn up in time for their next meeting in January.
That could lead to gradual cuts in Europe's imports of Iranian crude.
Separately, they added 180 Iranian people and entities to a sanctions blacklist that imposes asset freezes and travel bans on those involved in the nuclear programme, which Tehran says is for peaceful purposes.
Concern over Iran's programme grew this month after the International Atomic Energy Agency issued a report that suggested Iran has worked on designing an atom bomb.
French Foreign Minister Alain Juppe said after meeting his counterparts in Brussels that the EU would work with its partners to offset any shortfall if an oil embargo were imposed.
France, which has pushed for oil sanctions, appears to have overcome resistance among some EU member states who had expressed concerns over economic costs of an oil embargo.
Experts say global crude prices could rise if the EU bans Iranian oil, which could bring additional economic pain as Europe struggles with a debt crisis and the spectre of recession.
Greece, in particular, had been reticent, because financial woes have led it to buy more Iranian crude.
Sources say Tehran has been offering better financing terms at a time when banks are reluctant to extend loans to Athens.
Britain, along with France, had pushed for decisive EU action after Tuesday's storming of British diplomatic compounds in Tehran by protesters angry over London's decision this month to impose sanctions on the Iranian banking sector.
Britain shut Iran's embassy in London and expelled all its staff yesterday, saying the storming of the British mission in Tehran could not have taken place without consent from Iranian authorities.
British Foreign Secretary William Hague denied a link between the embassy storming and today's meeting in Brussels.
Ministers said in addition to the oil sector, Iran's transport and finance industries could be targeted.
The US State Department said it supports increasing pressure on Iran over its nuclear programme, including carefully designed, targeted and timed sanctions on its central bank.
