US steps up sanctions as Iran floats nuclear talks

US President Barack Obama signed new sanctions against Iran into law on Saturday, shortly after Iran signalled it was ready for fresh talks with the West on its nuclear programme and said it had delayed long-range missile tests in the Gulf.
Tensions between Iran and the West have grown since EU leaders said they wanted to set tougher sanctions against Tehran by the end of next month in a bid to force it to curb a research programme that they suspect is developing nuclear weapons.
In the absence of a fresh mandate from the UN Security Council, which has already imposed four rounds of global sanctions, Washington has also stepped up the pressure with sanctions on financial institutions that deal with Iran's central bank. The defence funding bill, approved by Congress last week, aims to reduce the oil revenues that make up the bulk of Iran's export earnings. Obama signed it in Hawaii, where he was spending the Christmas holiday. If enforced strictly, the sanctions could make it nearly impossible for most refiners to buy crude from Iran, the world's fourth biggest producer.
However, Obama asked for scope to apply the measures flexibly, and will have discretion to waive penalties. Senior US officials said Washington was consulting foreign partners to ensure the new measures did not harm global energy markets.
Iran responded to the growing pressure by warning this week that it could shut the Strait of Hormuz if sanctions were imposed on its oil exports. It launched 10 days of naval wargames in the Gulf as a show of strength, further rattling oil markets and pushing up the price of crude. In the past, Iran has threatened to close the waterway only if attacked by the United States and Israel. The US Fifth Fleet, based in Bahrain, said it would not allow shipping to be disrupted in a waterway through which 40 percent of the world's oil passes. Analysts say that Iran is playing for time and that its increasingly strident rhetoric shows its clerical leadership is concerned about even harsher penalties.

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