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EU may study oil embargo on Iran; China urges calm

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By Justyna Pawlak and Robin Pomeroy, Reuters



BRUSSELS/TEHRAN (Reuters) - The European Union tightened
sanctions against Iran on Thursday and laid out plans for a possible
embargo of its oil in response to mounting Western suspicions that
Tehran plans to build nuclear weapons.

China, the biggest buyer
of Iranian crude, stepped in to warn against "emotionally charged
actions" that might aggravate the row over the storming of Britain's
embassy in Tehran.

Top U.S. officials said they wanted to
sanction Iran's central bank in a calibrated manner to avoid roiling oil
markets or antagonizing allies. Their approach clashes with that of
U.S. lawmakers pushing for faster action.

In Iran, diplomats said
protesters had devastated parts of the British embassy complex in
Tehran. A commander in an Iranian militia which joined Tuesday's
ransacking said he was tired of decades of British "plotting" against
Iran.

EU foreign ministers meeting in Brussels said Iran's
energy, financial and transport sectors might be targeted in response to
a report from the U.N. nuclear watchdog body which suggested Iran has
worked on designing an atom bomb.

They added 180 Iranian people
and entities to a blacklist that imposes asset freezes and travel bans
on those involved in the nuclear work, which Tehran says is for peaceful
purposes. But they appeared to postpone decisions on a ban on oil
imports.

DECISION DELAYED

Ministers said a decision would
be taken no later than their next meeting in January. EU member states
take 450,000 barrels per day of Iranian oil, about 18 percent of the
Islamic Republic's exports, much of which go to China and India.

European
Energy Commissioner Guenther Oettinger said all 27 EU states would need
to back any embargo. "We need a common position of all European Union
member states," he told Reuters.

French President Nicolas Sarkozy
proposed the embargo and won backing from Britain, but resistance
persists. An import ban might raise global oil prices during hard
economic times and debt-strapped Greece has been relying on Iranian oil,
which comes with an attractive financing offer.

French Foreign Minister Alain Juppe said the EU could aim to offset any crude oil shortfall if a ban were imposed.

U.S.
Under Secretary of State Wendy Sherman told the Senate Foreign
Relations Committee the Obama administration wanted "properly designed
and targeted sanctions against the central bank of Iran."

U.S.
officials made clear they opposed an amendment sponsored by Senator
Robert Menendez, a Democrat, and Senator Mark Kirk, a Republican, that
would allow the U.S. president to sanction foreign banks found to have
carried out a "significant financial transaction with the Central Bank
of Iran."

The Senate was to vote on the amendment later on Thursday.

Italy
said it was recalling its ambassador from Tehran for consultations and
considering closing its embassy, the latest of several European
countries to make similar moves.

Britain has shut down Iran's
embassy in London after pulling out its own diplomats from Tehran. It
said the storming could not have taken place without the consent of
Iranian authorities.

"I stress that the measures I hope we will
agree today are related to the Iranian nuclear program. These are not
measures in reaction to what has happened to our embassy," Foreign
Secretary William Hague told BBC radio.

"There is more work to be
done on what we will do in the energy sector," he said. "So I think it
would be going too far to say an embargo has been agreed."

Hague
argued previous measures had held up Iran's nuclear work. "The EU made
very clear that it will not bow to Iran's intimidation and bullying
tactics," he said.

"We want Iran to come to the table and
negotiate meaningfully about its nuclear program. Despite events this
week we still want a diplomatic solution."

The uneasiness in Britain's relations with Iran dates from long before the 1979 Islamic Revolution.

Brigadier
General Mohammad Reza Naqdi of the Basij militia, which participated
along with hardline students in the embassy incident, said Iranians
"were tired of decades of London's plots against Tehran," the official
IRNA news agency reported.

EU diplomats who visited the embassy
told Reuters of severe damage. "I saw two rooms where you couldn't see
what they were. There was just ashes ... It was devastating to see," one
said.

"You could tell the action was coordinated," he added.

The
incident has bared a rift within Iran's ruling elite, with conservative
hardliners pushing Iran towards global isolation as they maneuver for
the upper hand over President Mahmoud Ahmadinejad ahead of elections in
2012.

CHINA URGES RESTRAINT

Beijing issued an appeal for
cool heads. "China hopes that the relevant parties can remain rational,
calm and restrained, to avoid emotionally charged actions that could
intensify the dispute," a Foreign Ministry spokesman said.

Russia
warned against "cranking up a spiral of tension," saying it undermined
the chances Iran would cooperate with efforts to ensure it does not
build nuclear arms.

Russia and China have approved four rounds of
U.N. Security Council sanctions against Iran over its nuclear program,
after working together to blunt tougher Western proposals.

Iran's
seaborne trade is already suffering, with shipping companies scaling
down or pulling out as the Islamic Republic faces more hurdles in
transporting its oil.

U.S. Vice President Joe Biden told Reuters during a visit to Iraq the storming of Britain's embassy showed Iran's isolation.

"I
don't have any indication how and or if it was orchestrated," Biden
told Reuters in an interview. "But what I do know is that it is another
example to the world and the region that these guys are basically a
pariah internationally."

In Jerusalem, Defense Minister Ehud
Barak said an Israeli attack was not imminent but all options remained
open to stop what Israel sees as an Iranian bid to develop nuclear
weapons.

India's navy said it was monitoring an Iranian cargo ship, with armed men on board, moored off India's southern coast.

Shipping
data showed the ship MV Assa was owned and operated by Islamic Republic
of Iran Shipping Lines, a company facing sanctions from the United
States and the EU.

(Additional reporting by Michael Martina in
Beijing, Hashem Kalantari in Tehran, Vladimir Soldatkin in Moscow, David
Brunnstrom, Ilona Wissenbach and Sebastian Moffett in Brussels, Jeffrey
Heller in Jerusalem and Tim Castle in London; Writing by Andrew Roche;
Editing by Jon Boyle)

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