In this Tuesday, April 15, 2008 file photo Iranian oil technician Majid Afshari makes his way to the oil separator facilities in Iran's Azadegan oil field southwest of Tehran, Iran. The market is so flush with oil at the moment that even the loss of more Iranian crude from the market may not lead to short supplies and higher prices. In fact, if Iran figures out a way to get around the sanctions and get more of its oil to market, oil prices could fall further.
The EU ban on crude imports is part of a push by Western countries aimed at choking Iran's export earnings and forcing it to curb a nuclear programme they fear includes weapons development. Tehran says it has no such plan.
"We are implementing programmes to counter sanctions and we will confront these malicious policies," Mehr news agency quoted central bank governor Mahmoud Bahmani as saying.
He said the effects of the sanctions were tough but that Iran had built up $150 billion in foreign reserves.
The European Union banned new contracts for imports of Iranian crude in January, but allowed existing ones to continue until July 1. EU firms are also barred from transporting Iranian crude or insuring shipments under the sanctions.
"They signal our clear determination to intensify the peaceful diplomatic pressure," British Foreign Secretary William Hague said in a statement.
So far, sanctions have not forced Iran into concessions on its nuclear programme - in fact it demands that they stop before it will take steps to curb uranium enrichment - and France and Britain have signalled more measures could come.
The United States has also imposed a new round of sanctions that could punish foreign countries dealing in Iranian oil, although it gave exemptions to 20 major oil buyers that are cutting purchases.
"All possible options have been planned in government to counter sanctions," Iranian Oil Minister Rostam Qasemi said in comments on the ministry's website.
Qasemi said oil importers would be the big losers if a blockade leads to price rises.
But there are signs of the embargo having an impact on Iran's economy.
Its crude oil exports - which according to EU estimates represent half the government's income - have fallen by 40 percent this year. Iran used to export a fifth of its crude to EU countries.
The Iranian rial has fallen and inflation is running at over 20 percent. Tens of thousands of Iranians have lost their jobs and trade between Iran and Europe has halved in a year, according to Eurostat data from March.
In three rounds of negotiations, Western powers have demanded Tehran halt its high-grade uranium enrichment activities, ship all high-grade uranium out of the country and close down a key enrichment facility.
But the talks have lost steam. At a meeting among political leaders in Moscow last month, there was not enough common ground for negotiators to agree yet whether to meet again.
Experts from Iran and six world powers - the United States, Russia, China, Britain, France andGermany - are set to meet in Istanbul this week, but purely for technical discussions.
Iran says its nuclear programme has only peaceful aims, but Western countries and Israel fear Iran is developing nuclear weapons. Israel, believed to be the only country in the Middle East with nuclear weapons, has threatened to attack Iran.
(Additional reporting by Avril Ormsby, editing by Matthew Tostevin)