European governments today agreed to introduce a ban on all new contracts to import Iranian crude oil, as Tehran refuses to budge on its controversial nuclear programme.

Foreign Secretary William Hague said the decision demonstrated the EU’s growing concern about Iran’s nuclear programme: “It is action made necessary by Iran’s defiance of six UN Security Council Resolutions and its refusal to enter negotiations over its nuclear programme.

“Iran’s recent decision to commence 20% enrichment at its underground site at Qom shows that it continues to choose a path of provocation. This is an enrichment programme that has no plausible civilian use, in a site that the Iranian authorities hoped to keep secret.”

As the world’s fifth largest oil producer, Iran is expected to feel the pinch as it will lose 20% of its exports business which normally heads to Europe.

By way of helping the poorer economies in the Union, the agreement allows those countries which have contracts with Iran to continue their imports until July 1, 2012, Reuters reported. EU governments have also agreed to freeze the assets of Iran’s central bank.

Mr Hague continued: “Iran has it in its power to end sanctions by changing course and addressing the concerns of the international community. We are ready to talk at any point if Iran puts aside its preconditions. Today’s sanctions show how serious EU member states are about preventing nuclear proliferation and pressing Iran to return to the negotiating table.”