President Barack Obama on Tuesday ordered new sanctions on Iran's energy sector and on foreign banks in China and Iraq that the U.S. says help the Islamic republic evade international penalties.

The election year sanctions come as Obama combats criticism from Republican rival Mitt Romney, who says the president hasn't acted strongly enough to prevent Iran from building a nuclear weapon. Romney is returning from an overseas trip that included a stop in Israel, where Prime Minister Benjamin Netanyahu also expressed doubts about the effectiveness of U.S. sanctions.

The new penalties announced by the White House on Tuesday target China's Bank of Kunlun and Iraq's Elaf Islamic Bank, institutions the U.S. says have facilitated transactions worth millions of dollars on behalf of Iranian banks that are subject to sanctions.

"Today's action makes it clear that we will expose any financial institution, no matter where they are located, that allows the increasingly desperate Iranian regime to retain access to the international financial system," Obama said in a statement.

Obama also expanded penalties on Iran's energy and petrochemical sectors, authorizing sanctions on those who try to purchase oil from the Islamic republic through the National Iranian Oil Co. and the Naftiran Intertrade Co. Earlier U.S. sanctions already penalized entities that purchased oil through Iran's Central Bank.

However, the sting of those sanctions was lessened when the U.S. granted waivers to 20 countries because they had significantly reduced their purchases from Iran. Countries that received waivers for Central Bank purchases will also be exempt from these expanded penalties.

Ben Rhodes, Obama's deputy national security adviser, said existing sanctions already have resulted in a significant amount of Iranian oil coming off the market, the Iranian currency has lost nearly 38 per cent of its value in the past year and that firms from around the world have divested themselves from doing business with Iran.

Congress targets energy, shipping sectors

Some Republicans, including Romney, and Israeli officials are skeptical about whether economic pressure will persuade Iran to halt its nuclear program.

"All the sanctions and diplomacy so far have not set back the Iranian program by one iota," Netanyahu said this week.

A third set of sanctions announced by the White House on Tuesday targets individuals and entities that help Iran purchase dollars or precious metals like gold in an attempt to boost its sagging currency.

Obama's new sanctions come as Congress pushed ahead this week with a new package of severe sanctions on Iran's energy, shipping and financial sectors.

House and Senate negotiators reached agreement late Monday on legislation that builds on the current penalties directed at financial institutions that do business with Iran's central bank. The new bill would impose sanctions on anyone who mines uranium with Iran; sells, leases or provides oil tankers to Tehran; or provides insurance to the National Iranian Tanker Co., the state-run shipping line.

"The congressional efforts can be complimentary to what we're doing," Rhodes said, adding that administration officials have worked closely with lawmakers on the legislation.

Iranian officials quickly criticized the latest round of penalties, labelling the economic pressure "warfare" and promising to retool the country's oil-dependent economy.

The Democratic and Republican leaders in the Senate said Tuesday they expect swift passage of the latest package of sanctions after a House vote tentatively scheduled for Wednesday.

The West suspects Iran is pursuing a nuclear weapon. Iran says the program is for peaceful purposes such as power generation and medical treatment.