Prices topped $105 a barrel in Monday trading on international markets.
Iran's Islamic Republic News Agency quoted an Oil Ministry spokesman Sunday as saying the country's crude exports to British and French companies had been suspended.
"We have our own customers and replaced British and French companies with other firms," ministry spokesman Ali Reza Nikzad-Rahbar said, adding only 18 percent of Iranian oil exports were being exported to Europe prior to the cuts.
The New York Times said Iran's decision may only be symbolic as Britain and France do not depend much on its oil. The two countries have been strongly opposing Iran's nuclear enrichment and also have been firm in opposing the Syrian government's crackdown on its pro-democracy movement. Syria and Iran are close allies.
The New York Times said Iran, facing severe sanctions, may, however, be reluctant to take similar steps against its larger European customers. The report quoted an official at the Iranian Oil Ministry as saying Iran is seeking longer-term contracts with other European nations. Major European customers include Greece, Italy and Spain.
One British government official was quoted as saying "we're not getting exercised about" Iran's decision as its oil amounts to less than 1 percent of Britain's imports.
Jean-Louis Schilansky, president of the French Union of Petroleum Industries, was quoted as telling France's Le Monde that "the Iranian decision has no practical, direct consequences" for France, which since 2011 "practically stopped importing Iranian oil."
But for Iran, producing 3.5 million barrels a day and exporting 2.5 million barrels daily, oil sales are vital for earning foreign exchange, the report said. Oil revenues finance more than 50 percent of the national budget.
Iran claims its nuclear program is for peaceful purposes, but Western nations say it is for developing nuclear weapons.
The Los Angeles Times said speculation is growing about a likely Israeli or U.S. strike on Iranian nuclear sites.
"None of us want Iran to have nuclear weapons. [But] I don't think it would be a wise thing at this moment ... for Israel to launch a military attack on Iran," Hague told the BBC. "I think Israel like everyone else in the world should be giving a real chance to the approach we've adopted of very serious economic sanctions and diplomatic pressure and the readiness to negotiate with Iran."
Dempsey told CNN's "Fareed Zakaria GPS" Iran could still be dissuaded from pursuing nuclear weapons.