Oil prices rallied this evening after the EU slapped an embargo on Iran's crude exports as part of tough new sanctions aimed at stopping the key oil producer from funding its disputed nuclear programme.
Brent North Sea crude climbed $1.17 to $111.03 a barrel in London. US crude gained $1.04 to $99.37.
The oil ban, along with sanctions against Iran's central bank and other measures, come amid mounting concerns of confrontation after the UN atomic agency reported that Iran was inching ever closer to building a nuclear bomb.
After weeks of fraught talks on the terms of an embargo, expected to hurt financially-distressed EU nations, the ministers agreed on an immediate ban on oil imports and a gradual phase-out of existing contracts between now and July 1.
They also froze the assets of the country's central bank "while ensuring that legitimate trade can continue under strict conditions", a statement said.
In the toughest action yet to reduce Iran's ability to fund a nuclear weapons programme, the EU outlawed petrochemical imports and investments and banned the sale of gold, diamonds and other precious metals.
Iran insists its nuclear programme is exclusively for peaceful, civilian use.
Greece's dependence on Iranian oil had been holding up an accord on the timing and conditions of the embargo. The struggling euro zone member relies on Iran for more than a third of its crude. Iran sells about one-fifth of its crude to EU nations, with Greece, Spain and Italy the top buyers.
Embargo will affect prices - Gilmore
The Tánaiste and Minister for Foreign Affairs, Eamon Gilmore, has said that Ireland supports the EU imposing an oil embargo on Iran because its pursuit of a nuclear programme simply can not be ignored.
Speaking in Brussels, Mr Gilmore said there was no doubt that the embargo would have an impact on oil prices, but it was difficult to quantify just how much petrol, diesel and home heating oil would increase by.
He told journalists this morning that while this was clearly an issue for consumers, the expected price increase had to be weighed against the seriousness of the problem of Iran's nuclear programme.
Mr Gilmore said the aim of the sanctions was to bring Iran back to the negotiation table for meaningful talks.
