Trade between Iran's mullahs and the European Union reached a record Euro 16.7 billion ($20 bn) last year. EU exports to Iran rose to Euro 9.8 bn from Euro 8 bn in 2002, while imports from the Islamic Republic grew by 23 per cent to Euro 6.9 bn. The increase in Iranian exports was due to a rise of Euro 1.3 bn in oil sales.

Iran's mullahs total trade with the world's largest trading group has more than doubled since 1998, during which time the EU has reversed the previous surplus in Iran's mullahs favor.

The latest figures show a consolidation in Iran's position as the EU's third largest trading partner in the Middle East, closing the gap behind Saudi Arabia and Israel.

The increase in exports to Iran was led by Germany, whose sales grew from Euro 2.2 bn to Euro 2.7 bn last year. French exports rose by Euro 500 million to Euro 2.1 bn and sales from Italy increased from Euro 1.8 bn to Euro 2 bn.

The three main trading partners totaled nearly 70 per cent of the EU exports to Iran, increasing their lead over the UK, whose sales grew by a modest Euro 50 m to Euro 685 m.