The EU announced a package of measures on Friday to counter US sanctions on Iran, setting up a potential new conflict with Washington as Europe fights to save a landmark nuclear deal with Tehran.

The plans unveiled by the European Commission include enabling its member states to make direct payments for oil to Iran’s central bank and the revival of a 1990s era so-called “blocking statute” to allow companies to ignore US sanctions without fear of punishment in Europe.

The EU’s moves defy US wishes for it to comply with Washington’s relaunch of measures against Iran after Donald Trump pulled out of the 2015 nuclear accord last week.

But analysts say there will be limits to the effectiveness of the Brussels response, and European leaders, including French president Emmanuel Macron, have said they do not want a trade war with the US over Iran.

“As long as the Iranians respect their commitments, the EU will, of course, stick to the agreement of which it was an architect,” said Jean-Claude Juncker, European Commission president.

“But the American sanctions will not be without effect. So we have the duty, the commission and the European Union, to do what we can to protect our European businesses, especially SMEs.”

Ensuring Iran is still able to reap the economic benefits of the nuclear agreement is deemed critical to keeping the deal alive.

Under the accord, which was signed by the US, the EU, France, Germany, the UK, China and Russia, Iran agreed to scale back its nuclear activities in return for many western sanctions being lifted. It enabled Tehran to more than double its oil exports, which helped lift the country out of a deep recession.

Mike Pompeo, US secretary of state, who has held talks with his European counterparts, is due to present a diplomatic plan on the way forward for Washington and Europe on Iran in a foreign policy address on Monday.

Brian Hook, a senior state department official, said the plan aimed at achieving “a new security architecture and a better security framework, a better deal” to replace the existing accord.

“We very much want a diplomatic outcome,” Mr Hook said. “One that is going to increase the security of the American people.”

A person familiar with the Trump administration’s thinking said the EU’s measures were “grandstanding”.

“The economic logic is going to determine what these companies do,” the person said. “Corporations have already made their decisions.”

The European Commission said it was encouraging the EU’s 28 members to “explore the possibility of one-off bank transfers to the Central Bank of Iran”.

This could enable Tehran to receive oil-related revenues, particularly if US sanctions targeted EU entities active in oil transactions with Iran, it added.

The blocking statute — which will be based on a 1996 measure developed in response to US sanctions on Iran, Libya and Cuba — will forbid EU companies from complying with the extraterritorial effects of US sanctions, the commission said.

It will stop EU courts enforcing US sanctions judgments and will also allow companies to recover “damages arising from such sanctions from the person causing them”.

The commission will also push ahead with measures aimed mainly at supporting small and medium-sized companies, including freeing up the European Investment Bank to offer euro credit lines to avoid sanctions on the dollar.

US sanctions are due to reactivate 90 or 180 days after Washington’s withdrawal from the nuclear deal.

European diplomats are aware that its countermeasures may have limited impact in protecting and persuading multinational companies, which face the threat of fines, bars on doing business and even criminal prosecution in the US, to remain in Iran.

Total, the French oil company and the largest foreign in investor in Iran’s energy sector, said this week it would be forced to stop work on the South Pars gasfield unless Washington granted a specific waiver for the project.

Oil traders said the direct payments to Iran’s central bank could potentially be effective for smaller European refiners that do not have a large international presence or much exposure to the US.

But they raised questions about how effective or applicable the EU plan might be for companies and traders with a more global footprint.

The biggest trading companies have operations in the US that are far more important to their businesses than their dealings with Iran, leading them to be ultra cautious in their approach, company executives said on Friday.

They said that traders would prioritise adherence with the US sanctions over anything the EU might offer.

Jason Hungerford, a partner at Norton Rose Fulbright LLP, said he expected most international companies to continue to prioritise complying with the US despite the EU’s efforts: “Previously when major non-US companies have had to choose between complying with the EU blocking statute or complying with US sanctions they have chosen the US sanctions almost every single time,” he said.

The EU has also refrained from a more aggressive response involving possible retaliation against US companies.

European diplomats recognise their limited leverage and are nervous about provoking Washington further at a time of fast-deteriorating transatlantic relations, including over threatened US steel and aluminium tariffs.

Mr Macron said on Thursday that France had no wish to target US companies, nor force French companies to stay in Iran if they wanted to pull out. “The French president is not the CEO of Total,” he said.

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