The EU amended a key part of its Iranian sanctions package imposed in July 2012 by lifting its ban on the provision of insurance for tankers carrying crude oil from Iran.
EU foreign ministers meeting in Brussels agreed to suspend the sanctions with immediate effect for six months.
"Today's decision has lifted the prohibition on the provision of insurance and transport in relation to Iranian crude oil sales to its current customers," the Council of the European Union said in a statement.
Iran currently sells crude oil to only six countries -- China, India, Japan, South Korea, Turkey and Taiwan.
The EU said that it had also suspended its ban on the import, purchase or transport of Iranian petrochemical products and related services.
"To enable the transport of Iranian crude oil and petrochemical products, the prohibition on the provision of vessels is also suspended," it said.
The lifting of the sanctions was timed to coincide with the entry into force of the deal on Iran's nuclear program agreed in November in Geneva by Iran and world powers.
EU foreign affairs chief Catherine Ashton said Monday talks would begin next month with Iran and the other world powers on reaching a full deal.
"We aim to start negotiations on a comprehensive solution with Iran in February," Ashton said.
The UN atomic watchdog confirmed on Monday that Iran's partial nuclear freeze, part of the landmark deal with world powers struck in November, began on Monday as planned.
The International Atomic Energy Agency said in a report passed to member states that Iran "has ceased enriching uranium above 5%" fissile purities at the Natanz and Fordo facilities, AFP reported.
The report said that Iran was also converting its stockpile of medium-enriched uranium, a particular concern to the international community since it can relatively easily be further purified to weapons-grade.
It added that Iran "is not conducting any further advances to its activities" at Natanz, Fordo or the heavy-water reactor under construction at Arak, which could in theory provide Iran with weapons-grade plutonium.
JAPANESE INSURANCE
Japanese buyers of Iranian crude can now restart using international P&I clubs for the provision of insurance for tankers carrying Iranian crude.
P&I clubs can offer insurance of up to $7.7 billion per VLCC, but they halted cover for tankers carrying Iranian oil after the EU imposed sanctions against Tehran in June 2012.
The Japan Ship Owners' Mutual Protection & Indemnity Association, in a special circular obtained by Platts Monday, said: "EU-owned or registered vessels will be permitted to transport oil and petroleum cargoes from Iran, or that originate in Iran."
International P&I clubs will also be able to "provide cover to both EU and non-EU owned or registered vessels undertaking transportation of oil and petroleum products," it added.
However, it will not apply to ships chartered by state entities such as National Iranian Tanker Company and Islamic Revolutionary Guards Corps, it added.
Japan P&I Club has advised its member shipowners "to ensure that any contract/s will be fully executed by July 20, 2014 at the latest."
This is because regulators have not confirmed if there would be any grace period for run-off similar to the grace period contained in the initiating Council Regulation (267/2012 EC) if the suspensions are not extended beyond six months, it said.
Despite the lifting of the EU sanctions, the president of the Petroleum Association of Japan said Monday that he does not expect Japanese refiners' crude imports from Iran to change in the short term.
"We do not expect import volumes of Iranian crude to fluctuate in the short term," Yasushi Kimura said at a press conference in Tokyo.