WASHINGTON -- U.S. President Barack Obama is moving ahead with sanctions targeting Iran's oil exports in a move that significantly ratchets up pressure on Tehran to abandon its sensitive nuclear activities.
The move allows Washington to sanction foreign banks involved in the transfer of funds for Iranian oil, which would force other countries to give up their trade with the Islamic republic or face prohibitively high penalties in any U.S. transactions.
Oil profits account for some 70 percent of Iranian government revenues, fueling Tehran's controversial nuclear program.
The West fears that the program is working toward making a nuclear weapon, while Tehran insists that its intentions are peaceful.
A White House statement said that despite continuing "tightness" in the world oil market, Obama determined there is enough crude available to enact the sanctions without harming U.S. allies.
The determination was made "taking into account current estimates of demand, increased production by some countries, private inventories of crude oil and petroleum products, and available strategic petroleum reserves," the statement said.
Legislation passed by Congress late last year required Obama to determine by March 30, and every six months after that, whether the price and supply of non-Iranian oil are sufficient to allow importers to "significantly" cut their purchases from Iran.
In the past, the White House had warned that hitting Iran's oil sector too hard could shock the market and drive up prices. On March 30, the White House declined to speculate on what impact the move would have on already-high petrol prices but said other factors, including soaring international demand, are contributing to the price of oil.
On March 29, the White House said it had not decided to tap into the country's strategic oil reserves, which could temporarily increase the U.S. supply of oil and lower prices, but the option remains open.
In a memorandum to his state, treasury, and energy secretaries, Obama said he would continue to closely monitor the supply situation to ensure the market could accommodate a drop in volume of oil purchases from Iran.
The new U.S. sanctions will take effect at the end of June.
A European Union embargo on Iranian oil, approved in January, takes effect in July.
News agencies quoted a senior U.S. official as saying that once both the U.S. and EU measures take effect, "Iran will face a degree of pressure that is above and beyond anything that it has experienced before."
The official said China, India, and South Korea are among the countries that could be Impacted and said Obama discussed the issue with a number of leaders on the sidelines of a nuclear security summit in South Korea this week.
U.S. officials have engaged in months of consultations with partners on how they can reduce their oil imports from the Islamic republic without damaging their economies or facing shortages.
Before the March 30 decision, the U.S. State Department granted sanction exemptions to 10 EU countries and Japan because of steps they've made to curtail Iranian oil purchases. It could grant exemptions to additional countries in the coming weeks, and talks with several countries, including India, continue.
Turkey announced on March 30 that it was reducing oil imports from Iran by 20 percent.
The U.S. move comes ahead of an expected mid-April meeting between Iranian officials and members of the P5+1 grouping, the five permanent members of the United Nations Security Council plus Germany.
The meeting is a critical attempt at a diplomatic solution to Tehran's nuclear standoff with the West.
There was no immediate reaction from Tehran to the development in Washington.
Written by Richard Solash, with additional reporting by AP and Reuters