European refiners have started to sever links with Iran, stopping spot purchases of crude ahead of a European Union meeting later this month that could impose a full oil embargo on Tehran.

Industry executives and oil traders say some refiners have either stopped or have reduced new purchases of Iranian oil, although they continue to receive monthly oil supplies under earlier long-term agreements or term contracts, which they cannot break without incurring penalties.

Other refining officials and several oil traders confirmed a reduction in spot deals.

Traditionally, refiners buy two-thirds of their oil under term contracts and the rest on the spot market, although the precise split varies from company to company. – (Copyright The Financial Times Ltd 2012)