A US block, which will not come into force for 30 days, had been widely expected. Although the US uses only a small amount (worth about $4bn a year) of oil from Iran, there is speculation the Japanese, a big user, will be persuaded to join the trade embargo.
The latest tension, heightened by Iranian talk of a military confrontation, has underlined the industry's political sensitivity and, therefore, increased the upward pressure on the crude oil price.
On a volatile but ultimately dull day for the stock market British Petroleum flared with a 4.5p gain to 452p and Shell 7.5p to 744p. Enterprise Oil added 4.5p to 416p and Lasmo, where some still hope for a renewed attack from Enterprise, 6p to 174p.
The rest of the market, like other areas of commercial life, seemed inclined to enjoy an early, if unofficial, bank holiday Monday. With many European markets closed and New York opening on a hesitant note there was little activity with many investors content to be sidelined.
Shares opened lower then moved ahead as modest buying emphasised a stock shortage. By the close what had once been an 11.6-point gain was reduced to 3.7 at 3,220.4.
Interest rates continued to dominate sentiment. It is widely accepted that a half-point increase is now factored into market calculations. An announcement is expected on Friday or soon after. Indeed there is a body of opinion that believes any failure to lift rates would turn out to be bearish for shares.
Grand Metropolitan, the food and drink group, had an uncertain session as Smith New Court turned seller. In a 36-page review it frets about the quality of the Gilbey's gin to Burger King group's earnings and what it regards as an over-stretched situation. The price fell 1.5p to 398p.
Thorn EMI settled down after Friday's excitement but edged ahead 3p to 1,140p as the story of a Walt Disney strike continued to hover. SG Warburg remained in the takeover frame, up 6p at 775p.
Inchcape, another old takeover hopeful, was the best-performing blue chip, up 10.5p to 329.5p. Although Jardine Matheson bid expectations are never far from the surface the advance stemmed from more mundane influences - the recent firmness of the US dollar and the £40m sale of a product- buying off-shoot.
Bass was unchanged at 549p as it duly confirmed its acquisition of the Robinson's soft drink business. Unilever, buying the Colman's food operation, slipped 8p to 1,219p. Reckitt & Colman, seller of the two concerns, was little changed at 640p.
British Steel had another active session as higher steel prices prompted more profit upgradings. At one time the shares were up 3.5p but had to settle for a 1.5p gain to 170.5p, a new closing peak.
Cable and Wireless was little changed at 402p. It has acquired another overseas minority stake, a 7.01 per cent interest in Bezeq, Israel's leading telecommunications operation, for £63m.
Bowater, the packaging and paper group, gained 7p to 454p on a Panmure Gordon push; vehicle components group BBA, ahead of an analysts' visit later this week, held at 209p.
Cray Electronics dipped 2p to 71p. The shares were 155p before last week's shock profit warning. Cray was for long seen as a possible bidder for Racal Electronics.
There is now speculation that Racal will be tempted to turn the tables and mount a bid for Cray. Racal slipped 2p to 242p.
VSEL added 3p to 1,697p. The market expects the British Aerospace offer to be cleared by Whitehall this week. BAe rose 4p to 540p.
Amstrad, up 2p to 201p, was boosted by hopes of a sharp trading improvement.
Old takeover favourite Union, the former Union Discount, gained 5p to 89p following director buying.
Kwik Save, the retailer that recently attracted bid speculation, fell 18p to 571p. Results are due on Thursday and an uninspired performance, say £63.4m, against £65.5m, is expected.
Sage, the computer group, produced much better than expected results, lifting the shares 87p to 915p. But Danka Business Systems relapsed 35p to 385p on figures.Reuse content