Washington’s announcement of strict sanctions beginning Sunday, including on Iran's oil sector, is scaring off European traders.

Last month at the United Nations, the EU announced plans for a "special purpose vehicle" – a payment system to continue trade and business ties with Iran.

EU foreign affairs spokeswoman Maja Kocijancic told reporters on Wednesday that the payment mechanism has the backing of the remaining five signatories to the Iran deal—Britain, China, France, Germany and Russia. But senior officials in Brussels admit that it is proving difficult to set up.