Iran has stopped selling crude oil to British and French companies, the country's oil ministry has announced.
The move is in apparent retaliation against a decision by the European Union last month to stop importing crude from Iran from 1 July over its disputed nuclear programme.
The West says the nuclear programme is aimed at building bombs, but Iran insists it is for peaceful purposes.
The European Commission said last week that the bloc would not be short of oil if Iran stopped crude exports as they have enough in stock to meet their needs for about 120 days.
Industry sources told Reuters that Iran's top oil buyers in Europe were making substantial cuts in supply months in advance of EU sanctions, reducing flows to the continent in March by more than a third.
Saudi Arabia says it is prepared to supply extra oil either by topping up existing term contracts or by making rare spot market sales.
Iran said the cut will have no impact on its crude sales, warning that any sanctions on its oil will raise international crude prices.
France's Total has stopped buying Iranian crude oil and market sources said Royal Dutch Shell had scaled back sharply.
Among European nations, debt-ridden Greece is most exposed to Iranian oil disruption. Motor Oil Hellas of Greece was thought to have cut out Iranian crude altogether and compatriot Hellenic Petroleum, along with Spain's Cepsa and Repsol, were curbing imports from Iran.
The new European Union sanctions include a range of extra restrictions on Iran that go well beyond UN sanctions agreed last month, and include a ban on dealing with Iranian banks and insurance companies and steps to prevent investment in Tehran's oil and gas sector.
The mounting sanctions are aimed at putting financial pressure on the world's fifth largest crude oil exporter, which has little refining capacity and has to import about 40% of its gasoline needs for its domestic consumption.