By Agencies

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Barack Obama has tightened sanctions on Iran, including its central bank, seeking to increase pressure on the country's economy.

The US president signed an executive order, which came into effect on Monday, that implements parts of a new sanctions regime passed by congress late last year.

The order comes amid high tensions with Iran, which has threatened to close the crucial Strait of Hormuz. Israel has suggested it may attack Iran's nuclear sites soon.

Obama's order allows US institutions to freeze all property and interests of the Iranian government, the central bank of Iran and all Iranian financial institutions that come within US jurisdiction. Previously, US banks were required to reject and send back, rather than block and freeze, Iranian transactions.

The measures, passed with wide majorities in congress last year, also included a requirement for Obama to impose sanctions on foreign financial institutions that do business with the Iranian central bank or other finance firms, but Obama did not implement those sanctions on Monday.

The measures were designed to strangle Iran's access to foreign finance and commerce and to cripple its lucrative oil and energy industry by effectively barring foreign firms that do business with Tehran from the US financial system.

Although Obama's order did not implement them, the treasury department warned that firms doing business with Iran "remain at risk" of US punishments.

The president has the power to issue waivers to halt the impact of such sanctions, once they come into force, every 120 days.

Senior White House officials are currently studying the measures passed by congress to find a way to implement them that maximises pain for Iran, but does not cause a huge jump in oil prices that could harm the fragile US economic recovery.