Tensions over Iran's nuclear programme are raising fears of a confrontation over oil supplies. European Union foreign ministers are expected to announce a phased ban on the purchase of oil from Iran at a meeting in Brussels.
It would be the latest EU measure to be introduced to punish Iran over its nuclear programme.The EU currently buys around 20% of Iran's oil exports.
Tehran denies that it is trying to develop nuclear weapons and says talks and not sanctions are the only way to resolve the dispute.
Meanwhile, the Pentagon said the US aircraft carrier USS Abraham Lincoln, as well as a British Royal Navy frigate and a French warship, have passed through the Straits of Hormuz at the entrance to the Gulf without incident in the wake of Iranian threats to block the trade route.
'Substantial impact' EU foreign policy chief Catherine Ashton repeated again on Monday her previous assertion that the sanctions were a way of persuading Iran to take part in talks.
"The pressure of sanctions is designed to try and make sure that Iran takes seriously our request to come to the table and meet," she said as she arrived at the meeting in Brussels.
She said world powers had yet to receive a reply to an offer made to Iran in October to hold new talks.
UK Foreign Secretary William Hague said, as he arrived for the meeting, that the measures were an important way of increasing "the peaceful legitimate pressure on the Iranian government to enter into meaningful negotiations with the international community".
EU diplomats agreed last Thursday to impose sanctions on Iran's central bank, but the potential impact of an oil embargo is more substantial.
A decision by the EU to stop buying from Iran may damage the Iranian economy - but in itself it won't destroy it, our correspondent says.
Rising tensions Iran sells most of its oil to countries in Asia. The EU and the United States are now working to persuade Asian countries to reduce their purchases from Iran as well.
It is reported that the EU will immediately prohibit the signing of any new oil contracts with Iran and will bring in a ban on imports in July, to give members time to procure oil from other sources.
Iran has already threatened to retaliate by blocking the Strait of Hormuz at the entrance to the Gulf, through which 20% of the world's oil exports pass.
The US has said it would keep the trade route open, raising the possibility of a confrontation.
Late last year Iran conducted 10 days of military exercises near the Strait of Hormuz, test-firing several missiles.
Oil prices have risen already because of the increasing tension and the expected impact of an EU ban on oil supplies to Europe.
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