Iran has ceased oil exports to the UK and France in reply to European Union's decision to ban purchases of Iranian crude that were planned to begin in July.

Last week it was reported that Iran warned the six European Union nations, namely, Italy, Spain, Portugal, Greece, France and the Netherlands about cutting exports to them. Going by the state-run Fars News Agency, Iran was to end sales of crude to the six countries unless they agreed to long-term contracts and payment guarantees.

European Union governments agreed last month to halt oil purchases from Iran, which is the second-largest producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia. European Union buys about 18 percent of Iran's total crude exports. However, the UK and Germany get only about 1 percent of their oil from Iran, while France gets only about 3 percent from there. European countries such as Greece, Italy and Spain, are much more reliant on Iranian oil. According to European Union data, Italy and Spain each get about 13 percent and Greece receives 33 percent of their oil from Iran.

Western nations, including the U.S., have alleged that Iran is building a nuclear weapon, a claim which Tehran has denied.

Tensions between Iran and Israel intensified last week. The wife of an Israeli diplomat and her driver were injured when the car they were traveling in was bombed in New Delhi, India, with Israeli leaders accusing Iran of being responsibile for the attack. A bomb was also defused outside the Israeli embassy in Tbilisi, Georgia. In addition, a group of three Iranian men accidentally detonated explosives at a home they had rented in Bangkok. Iran has denied responsibility for all three incidents.

Meanwhile, U.S President Barack Obama's National Security Adviser Tom Donilon met with Israeli Prime Minister Binyamin Netanyahu in Jerusalem to discuss the Iran situation. Certainly there is the growing fear of a new war, with Israel having made it clear that its patience is running out.

Europe and the U.S. are tightening economic sanctions against Iran, with Iran repeatedly arguing that such sanctions will not cripple the country's economy or disrupt its nuclear program. In response, Iran has threatened to withhold oil deliveries and block the Strait of Hormuz, through which a fifth of the world's oil flows.

It was also reported that Iran's top oil buyers in Europe were making substantial cuts in supply months in advance of European Union sanctions. Those that have reduced Iranian imports are filling the void with a range of replacement barrels from top exporter Saudi Arabia, Iraq and Russia.

At the same time, demand for oil in developing nations has pushed up the global demand and prices. Asian economies have been buying more. China buys 22 percent of Iran's exports, India 12 percent, and most of the remainder is exported to Turkey, Japan and South Korea.