Oil accounts for 50 percent of Iranian budget revenues, and those arguing for sanctions say they can deprive Tehran of billions of dollars and derail what the West sees as Iran's attempts to build a nuclear bomb.

But diplomats and oil industry insiders say Europe may calculate that even a small rise in oil prices as a result of an introduction of an EU-wide embargo would more than compensate Tehran for any losses from being obliged to re-route displaced supplies to Asia at discounted prices.

"Maybe the aim of sanctions is to help Italy, Spain and Greece to collapse and make the EU a smaller club," one trader joked.

The remark reflects the growing unease that EU sanctions would hit hardest some of the continent's weakest economies, because Iranian oil provides the highest share of their needs, not to mention the rest of the bloc.