WASHINGTON — Targeting Iran's economy, the U.S. ordered tough new penalties Monday to further pinch the country's financial system and encourage Israel to give sanctions more time before any military action against Iran's nuclear program.

The new, stricter sanctions, authorized in legislation that President Barack Obama signed in December, will be enforced under an order he signed only now. They give U.S. banks new powers to freeze assets linked to the Iranian government and close loopholes that officials say Iran has used to move money despite earlier restrictions imposed by the U.S. and Europe.

The action against the Central Bank of Iran is more significant for its timing than its immediate effect. It comes as the United States and its allies are arguing that tough sanctions can still persuade Iran to back off what the West contends is a drive to build a nuclear bomb.

The U.S. and Europe want to deprive Iran of the oil income it needs to run its government and pay for the nuclear program. But many experts believe Iran will be able to find other buyers outside Europe.

The European Union announced last month it would ban the import of Iranian crude oil starting in July. The U.S. does not buy Iranian oil, but last month it placed sanctions on Iran's banks to make it harder for the nation to sell crude. The U.S., however, has delayed implementing those sanctions for at least six months because it is worried about sending oil prices higher at a time when the world economy is struggling. Iran exports about 3 per cent of the world's oil

The faster and more painfully sanctions can be seen to work, the better the case to shelve any plan by Israel to bomb Iran, a pre-emptory move that could ignite a new Mideast war. Taking this initial step against the Central Bank, the first time the U.S. has directly gone after that major institution, is one way the Obama administration can show momentum now.

Israel, meanwhile, has been increasingly open about its worry that Iran could be on the brink of a bomb by this summer and that this spring offers the last window to destroy bomb-related facilities. Many Israeli officials believe that sanctions only give time for Iran to move its nuclear program underground, out of reach of Israeli military strikes.

White House spokesman Jay Carney denied that Monday's unexpected announcement of new banking sanctions was a sign of heightened worry about an Israeli attack.

"There has been a steady increase in our sanctions activity and this is part of that escalation," he said.

Carney said U.S. sanctions on Iran are already squeezing Iran's economy and have exacerbated tensions within the Iranian leadership.

"There is no question that the impact of the isolation on Iran and the economic sanctions on Iran have caused added turmoil within Iran," he said.

Iran is the world's third-largest exporter of crude oil, giving its leaders financial resources and leverage to withstand outside pressure. Last year, Iran generated $100 billion in revenue from oil, up from $20 billion a decade ago, according to IHS CERA, an energy consulting firm.

If Iranian oil is prevented from getting to market, other suppliers could make up the difference. The U.S. has been pressuring other Middle East and African nations to step up production for sale to Europe. Saudi Arabia has said it could increase production to make up for any lost Iranian crude.

Iran's disputed nuclear program became a global concern more than five years ago, when the extent of the country's research and uranium enrichment began to be known. Since then a web of international economic and other sanctions have failed to stop Iran's progress toward a point when it could build one or more nuclear devices.

U.S. intelligence agencies say Iran is indeed close to that ability but has not yet decided to go ahead. Iran says its nuclear program is peaceful and denounces sanctions as aggression.

The new U.S. penalties were unexpected now. The sanctions were included as an amendment in the wide-ranging defence bill the president signed in late December, though when and how they were to be levied on Iran was unclear.

The White House had previously said it would take months to evaluate the likely effect on the fragile global economy before taking the next large steps, including new penalties on the Central Bank.

Now, U.S. institutions are required to seize Iranian state assets they come across, rather than rejecting the transaction involved.

The value of Iranian assets affected by the new order was not clear. Iran does almost no direct business with the United States after three decades of enmity, but its money moves through the world financial system and its oil is sold in dollars.

In a letter to Congress, Obama said more sanctions were warranted, "particularly in light of the deceptive practices of the Central Bank of Iran and other Iranian banks."

He cited the hiding of transactions of people or institutions and other loopholes.

In an interview Sunday with NBC, Obama said the U.S. has "a very good estimate" of when Iran could complete a nuclear weapon, and he spoke favourably of the effect of sanctions and diplomacy to resolve the impasse.

Obama addressed the concern about Israel but suggested there is still time.

"I don't think Israel has made a decision on what they need to do," Obama said.

He did not answer a question about whether Israel has promised to notify the United States before any pre-emptory strike.

Republican presidential candidates have accused Obama of being too timid in his dealings with Iran, and while U.S. officials reject that characterization they acknowledge they are stepping cautiously because of fear of upsetting the global economy.