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The European Union (EU) has approved a gradual ban on all future contracts to import Iranian oil as part of an international effort to put pressure on Iran’s controversial nuclear programme.

The EU, which buys approximately 20% of Iranian oil exports, will stop signing new contracts with Iran, with all existing contracts to be phased out by 1 July 2012.

The oil embargo against Iran bans the import, purchase and transport of Iranian crude oil and petroleum products. EU foreign ministers have also banned the investment and export of key equipment and technology for Iran’s petrochemical sector.

Earlier this month, Japan also agreed to gradually cut its dependency on oil imports from Iran. Japan is Iran’s second-biggest customer for oil after China.

As a result, Iran faces a loss of 37% of its total oil exports of 2.5 million barrels per day, reports The Telegraph.

EU governments have also agreed to freeze assets held by Iran’s central bank in Europe and to place restrictions on the trade of gold, precious metals and diamonds between Iranian public bodies and the EU.

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By GlobalData