The European Union has banned imports of oil from Iran as Western powers increase the pressure on Tehran to abandon its nuclear development programme.
The 27 members of the EU are collectively the second biggest consumers of Iranian crude and news of the embargo pushed the price of Brent crude futures to over $110 dollars a barrel.
EU officials also agreed to freeze the assets of Iran's central bank and ban trade in gold and other precious metals with the bank and state bodies.
Struggling EU nations, including Italy and Greece, depend heavily on supplies of Iranian crude oil and have successfully argued for a grace period until 1 July. During this period EU countries may honour existing oil contracts with Iran before the embargo is enforced.
The US introduced similar sanctions on December 31.
In Iran, one politician responded by renewing a threat to blockade the Strait of Hormuz, an oil exporting route vital to the global economy, and another said Tehran should cut off oil to the EU immediately.