EU countries preparing oil ban on Iran

"If the European Union decides to impose the sanctions, Greece will join them ... If the sanctions are imposed, we will seek other ways to ensure we continue receiving the needed supplies and that the oil market operates smoothly," he said.

Greece - which buys around 35 percent of its oil from Iran - said No to the measures at an EU foreign ministers' meeting in Brussels in December. An EU diplomat at the time told EUobserver that several member states have reservations about the move because it would make oil more expensive for the EU but cheaper for Iran's Asian customers.

France has in recent weeks continued to build support for an EU embargo, however.

Its foreign minister, Alain Juppe, told France's I-Tele TV station on Tuesday there is no doubt that Iran is trying to build nuclear weapons and that President Nicolas Sarkozy wants to see an oil ban as well as a freeze on Iran's central bank assets.

"The US Congress voted in favour of this and the President of the United States has just approved the law. And we hope that the Europeans will take equivalent action by 30 January in order to clearly demonstrate our determination," he said, referring to the next regular meeting of foreign ministers.

The EU has since 2010 already banned its companies from helping Iran to pump oil or gas, provide insurance for Iranian firms or sell weapons to the Islamic republic. It has also built up a blacklist of around 300 companies and people involved in the nuclear programme and in human rights abuses.

In one sign that the sanctions are causing pain, 14 Iranian firms or groups of companies in 2011 launched law suits against the EU measures. One firm - Hanseatic Trade Trust & Shipping - won its case. Another one - Kala Naft - lost, while the rest are ongoing.

The US state department in a press briefing also on Tuesday pointed out that the Iranian rial nosedived after Washington blacklisted Iran's central bank at the weekend.

"I ... take note of the fact that there seems to have been a significant drop in the Iranian currency, and that’s among the measures of how these sanctions are biting on the country," spokeswoman Victoria Nuland said.

For its part, Iran has threatened to shut down the Strait of Hormuz - a 34-km-wide sea passage between Oman and Iran used by Saudi Arabia and other Gulf states to get their oil to world markets - if its oil exports are blocked.

Its military earlier this week test fired Nasr and Ghader anti-ship missiles in a show of force. "Closing the Strait of Hormuz for Iran's armed forces is really easy ... or as Iranians say, it will be easier than drinking a glass of water," its naval chief, Habibollah Sayyari, told the state-run Press TV on Tuesday.

The sabre-rattling was matched by the US, which has a massive naval presence in the area.

Nuland said in her briefing that "no option is off the table" including air strikes against Iranian nuclear targets. "We believe in freedom of navigation through the straits and we believe in our right to move our vessels," she added.