Due to Iran's nuclear programme European ministers have adopted a formal oil embargo with immediate effect. Tehran denies these nuclear programs and says talks and not sanctions are the only way to resolve the dispute. 

UK Foreign Secretary William Hague said the embargo showed "the resolve of the European Union on this issue".

 "It is absolutely right to do this when Iran is continuing to breach United Nations resolutions and refusing to come to meaningful negotiations on its nuclear programme," he added. (www.bbc.co.uk/news, 23/01/2011)

The EU is a reliatevely small consumer of Iran's oil exports and purchases around 20%. Iran sells most of its oil to Asian countries and therefore the EU and the United States are trying to convince Asia to purchase less.

There has already been fear of confrontation as Iran has already threatened to close the Strait of Hormuz at the entrance to the Gulf, this is an area where 20% of the world's oil exports pass through. The US explained they would keep the route open.

Oil prices are already on the increase and if the troubles continue we may see further spikes.