The bloc's 27 countries have agreed in principle to ban oil imports from Iran in order to put more pressure on Tehran over its nuclear programme.
But they remain divided over several issues, primarily the length of a planned grace period that would allow states heavily dependent on Iranian oil to fulfil existing contracts for a period after the ban went into place.
At a meeting on Thursday, senior EU diplomats had been expected to agree to a plan allowing for a grace period until the end of June.
Under this compromise proposal, EU governments would be prohibited from making new contracts with Iran from the time the embargo was imposed, but could purchase crude previously contracted. This exemption would end on 1July.
"No agreement was reached today but we are confident it will be reached on Monday. Not everybody agreed to the compromise," one EU diplomat said.
Speaking on condition of anonymity, the diplomat said some EU states continued to push for a shorter grace period while others wanted more time to secure alternative supplies of crude.
Tehran denies wanting bombs, as the West alleges, saying it is refining uranium only for electricity generation and medical applications.
EU governments are divided between the desire to ratchet up pressure on Tehran quickly and economic considerations. States such as Greece are concerned about financial costs at a time when Europe is struggling with a two-year debt crisis.
Athens depends heavily on Iranian supplies because Tehran has been offering it preferential credit terms for its crude.
But others say a grace period would significantly blunt the initial impact of sanctions, because some three-quarters of EU purchases are covered by long-term contracts.
Diplomats said Greece is urging its EU peers to guarantee they will help it if Athens fails to secure sufficient alternative supply of crude, before it agrees to a date ending the grace period.
"Everybody understands Greece's reservations and the fact that it wants a discussion to take place with a political commitment from all 27 that we won't let them down if they fail to secure alternative supplies when the embargo is fully implemented," said one EU diplomat.
"It's true some states pushed for a shorter grace period, but it's mostly tactical and ... I am sure we will agree on July 1," the diplomat said.
One solution that could assuage Greek concerns is to introduce a review clause that would allow EU states to assess the economic costs of a full embargo shortly before it is introduced.
The EU embargo follows stringent new US sanctions signed into law by President Barack Obama on 31 December, which are being gradually implemented but if fully enforced would make it impossible for most countries to pay for Iranian oil.
EU diplomats said more discussions would be held in Brussels in coming days, in time for the foreign ministers of the EU's 27 states to make a formal decision. EU policies such as sanctions require unanimity and have to be finalised by ministers.