Oil market observer bodies and analysts say the embargo, coupled with US financial sanctions ramped up on Thursday, are gutting Iran's vital oil exports, which account for half of government revenues.

The International Energy Agency says Iran crude exports in May appear to have slipped to 1.5million barrels per day as the market braced for the embargo, well below the 2.1 to 2.2 million barrels per day Iran insists it continues to sell abroad.

"I do not see a problem in our enemies starting the sanctions as of today (Sunday), since these sanctions have existed for many years and nothing has happened and one should not anticipate anything new," he was quoted as saying on the website of state broadcaster IRIB.

Qasemi and other officials admitted the "illogical" embargo had reduced exports to EU nations, but they said other nations had stepped forward to buy the oil.

Before the embargo, Europe bought some 600,000 barrels per day from Iran, which sent two-thirds of its exports to China, India, Japan and South Korea.

The United States has granted exemptions to those Asian countries from its new sanction imposed on Thursday that targets foreign companies doing business with Iran.

Non-EU nations wanting to buy Iranian oil face an obstacle in insuring the tanker shipments, as more than 90 percent of such insurance is by EU companies now barred from underwriting Iran oil delivery contracts.

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