EU Slaps Oil Embargo on Iran, Tehran Says Move 'Doomed to Fail'

Iran on Monday branded as "unfair" a decision by the European Union to impose an embargo on Iranian oil exports as its lawmakers vowed the ban would neither alter Tehran's nuclear policies nor affect its economy.

"The method of threat, pressure and unfair sanctions against a nation that has a strong reason for its approach is doomed to fail," Foreign Ministry spokesman Ramin Mehmanparast said, quoted by the state broadcaster's website.

The spokesman said the newly adopted punitive measures would not prevent Iran from achieving its "inalienable rights."

The term is frequently used by Iranian President Mahmoud Ahmadinejad and other officials to refer to Tehran's nuclear program which they say is designed to master only civilian applications of the technology.

Western powers suspect Tehran is developing an atomic weapons program.

The European Union on Monday slapped an embargo on Iranian oil exports as the West ramped up pressure on Tehran over its controversial nuclear drive and urged it to return to the negotiating table.

EU foreign ministers agreed on an immediate ban on oil imports and a phase-out of existing contracts up to July 1. They also froze the assets of Iran's central bank while ensuring legitimate trade under strict conditions.

Mehmanparast said that the EU decision was shaped "under the political pressure of the United States," and warned that Tehran would immediately replace any country that turned its back on Iran's vast energy reserves.

The EU sanctions are among some of the toughest actions so far aimed at reducing the Islamic republic's ability to fund its nuclear weapons program.

Iran sells about 20 percent of its oil to EU nations, in large parts to Greece, Italy and Spain.

Iranian lawmakers also downplayed the EU ban.

Ali Adyani, a member of the Iranian parliament's energy commission, said the decision would "only serve some American and European politicians. It will not have any effect on Iran's economy," Fars news agency reported.

Another commission member, Hassan Shabanpour, rejected the sanctions as "propaganda", telling the parliament's website Saudi Arabia would not be able to compensate for Iran's oil exports to Europe.

The measures would cause a "drastic hike in oil prices" across the globe, he warned.

But the impacts of the new sanctions regime are becoming apparent as Iran's currency, the rial, continued a drastic weeks-long drop in value against the dollar on Monday.

The unofficial exchange rate in central Tehran was about 20,500 rials against the dollar during the day, the official IRNA news agency reported.

Although Iran's government insists there is no connection between the rial's slide and new sanctions, some officials have admitted a psychological effect as international sanctions spook ordinary Iranians.

The government has tried to shore up the rial by imposing a lower rate in banks and currency exchange bureaus, while also banning transactions outside of such outlets.

Last week, Iran's central bank banned possession and transactions in foreign currencies, including the dollar, without an official invoice, warning offenders would be prosecuted.

But many exchange bureaus have refused to buy or sell dollars at the imposed rates, thereby prompting along a black market despite police efforts to enforce the ban.

A sudden acceleration in the slide was seen after U.S. President Barack Obama at the end of December signed into law more sanctions hitting the central bank and targeting foreign firms which do business with the Islamic republic.

The new EU sanctions meanwhile would make it even more difficult for Iran, OPEC's second largest producer, to be paid in foreign currency for its oil exports, worth more than 100 billion dollars in 2011.

The currency crisis has provoked a rush for gold and other non-currency assets, with the price of gold coins in Iran rising by 25 percent since January 18.