Iran on Tuesday urged the European Union to reconsider an embargo on Iranian oil that comes into effect on July 1, saying it wanted engagement and not confrontation with the bloc.

EU governments on Monday formally approved the embargo, dismissing calls by debt-ridden Greece for exemptions to help ease its economic crisis.

"We hope that the European Union looks into the matter with more rationality and wisdom because I think nobody benefits from confrontation," Iranian Foreign Minister Ali Akbar Salehi told journalists in Cyprus.

"The benefit lies in engagement, and I think they are on the wrong track."

Salehi said he hoped that Cyprus, which takes over the rotating EU presidency on July 1, could help "mitigate and alleviate" obstacles in the relationship between Iran and the bloc.

There was no immediate comment from Cypriot authorities.

EU governments warned Iran on Monday that more pressure could be applied if it continued to defy demands for limits on its nuclear programme, which they say is geared to developing weapons. The Islamic Republic says its nuclear activity is for electricity production and other peaceful ends only.

At their meeting in Luxembourg, the EU foreign ministers said they would review the the embargo once implemented to ensure European governments retain sufficient access to crude.

In the short term, the six world powers that are negotiating with Iran want it to stop enriching uranium to a fissile purity close to that needed to produce material for nuclear bombs.

"We have this fabricated nuclear file, I call it fabricated because it is a politicised file," Salehi said.

Diplomatic efforts to solve the decade-long standoff faltered at a round of talks between Iran and the powers - United States, Russia, China, Britain, France and Germany - in Moscow this month, and Israel has renewed threats to attack Iran if it fails to rein in its nuclear work.

"It may stall sometimes, the process may not go as easy as everybody would like to see, but since they are in the right direction and both sides would like to see a resolution I see light at the end of the tunnel," Salehi said. – Reuters