Iran has claimed to have successfully tested a new medium-range ground to air missile during naval exercises in the Gulf, amid rising tensions over the country's nuclear programme.

State news agency Irna on Sunday quoted Iran's naval commander, Mahmoud Mousavi, as saying the missile was equipped with the latest technology and intelligent systems. The missile test was made during 10 days of naval exercises to the east of the Straits of Hormuz, the narrowest section of the Gulf, which Iran has threatened to close in the event of western sanctions on its oil exports.

The exercises come a few weeks before EU foreign ministers meet to consider further sanctions, possibly including an oil embargo against Tehran, after an International Atomic Energy Agency (IAEA) report in November confirmed western allegations that Iran had worked on nuclear weapons designs, at least until 2003, and may have carried out experiments more recently.

Amid constant speculation that Israel or the US could use air strikes against Iran's nuclear programme, Iran has attempted to buy long-range surface to air missiles from Russia. After Moscow cancelled the deal to sell its S-300 missiles last year, Tehran said it would develop its own as an independent deterrent against attack. Sunday's announcement appeared designed to show it was making progress.

Sanctions against Iran for its continued work on uranium enrichment, in defiance of UN security council resolutions, have until recently focused on limited measures targeted at individuals or organisations linked to the nuclear or missile programme. Since November, Britain, the US, Canada and France have imposed broader punitive measures on Iran's central bank.

A European ban on importing Iranian oil would represent a further, significant escalation in pressure, and would have immediate and serious repercussions across the Iranian economy. Western diplomats have played down Iranian threats to close the Straits of Hormuz in retaliation, saying such actions would be suicidal for its economy.

Iran insists its nuclear programme is entirely for peaceful purposes and on Saturday announced what it claimed was a breakthrough in its independent nuclear programme – the production of its first nuclear fuel rod. Such rods, filled with pellets of low-enriched uranium, produce the nuclear reactions for civilian power plants. They can also be used in research reactors to make isotopes for medical and other scientific purposes.