Executive order halts transactions by Iranian bank in US, despite concerns that it may drive up petroleum costs

Barack Obama has ordered the freezing of Iranian government assets in the US, including transactions by the Iranian Central Bank, in tightened sanctions over Tehran's nuclear programme.

The White House said the executive order by the president "re-emphasises this administration's message to the government of Iran – it will face ever-increasing economic and diplomatic pressure until it addresses the international community's well-founded and well-documented concerns regarding the nature of its nuclear programme".

The new sanctions, which also include the threat of prosecution for foreign financial institutions if they do certain kinds of business directly with Iran, also appeared timed to fit in with measures introduced in other countries, including Britain which has already moved against Iran's banking system by cutting it off from London's financial sector.

The administration had previously shied away from direct action against the central bank fearing that if Tehran is unable to carry through financial transactions necessary to sell its oil, that could force the cost of petroleum up and hit the US economy.

But Congress pushed sanctions against the bank through in legislation attached to the US's annual defence spending bill. The president had the power to stall them but that was politically sensitive with a growing chorus of Republicans and some Democrats demanding stronger measures against Tehran.

Obama said in a statement to Congress that the new sanctions are required in part because the central bank is using "deceptive practices" to get around earlier measures.

"I have determined that additional sanctions are warranted, particularly in light of the deceptive practices of the Central Bank of Iran and other Iranian banks to conceal transactions of sanctioned parties, the deficiencies in Iran's anti-money laundering regime and the weaknesses in its implementation, and the continuing and unacceptable risk posed to the international financial system by Iran's activities," he said.

The scale of Iranian official assets in the US is unclear given more than three decades of sanctions since the 1979 Islamic revolution.

In November, the US announced measures intended to limit Tehran's ability to refine its own fuel as well as targeting Iran's Revolutionary Guards' financial interests.

The US and European Union have also imposed additional sanctions on Iran's oil industry in recent weeks.

The new sanctions also come as Obama tries to dissuade Israel from a unilateral strike against Iranian nuclear facilities. Last week, US defence secretary Leon Panetta said he believes Israel may launch an attack before June.

On Sunday, Obama said he does not believe Israel has yet made the decision whether or not to attack. But he told NBC that all options remain on the table for US action if Iran presses ahead with developing a nuclear weapon.

"I think we have a very good estimate of when they could potentially achieve breakout capacity, what stage they're at in terms of processing uranium. But do we know all the dynamics inside Iran? Absolutely not," he said. "Knowing who is making decisions at any given time inside Iran is tough but we do have a pretty good bead on what's happening with the nuclear programme."