New Iran sanctions hit banks in China, Iraq

There was no immediate response from the Iranian government or from the companies cited in Obama's order.

• NEW: U.S. still wants a diplomatic solution to the nuclear issue, Obama says
• New sanctions crack down on banks Washington says helped Iran evade sanctions
• Iran insists its nuclear work is strictly peaceful
• Obama says Iran faces "growing consequences" for defying world concerns

Washington (CNN) -- President Barack Obama on Tuesday announced new U.S. sanctions targeting Iran's oil industry as well as banks in China and Iraq, warning that Tehran faces "growing consequences" for refusing to answer international questions about its nuclear program.

Obama said China's Bank of Kunlun and the Elaf Islamic Bank in Iraq "facilitated transactions worth millions of dollars" for Iranian banks already under sanctions.

"By cutting off these financial institutions from the United States, 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 issued by the White House.

"Since taking office, we have presented the Iranian government with a clear choice: come in line with your international obligations and rejoin the community of nations, or face growing consequences."

The sanctions announced Tuesday are aimed at crippling sales of Iranian petrochemical products as well as crude oil. There was no immediate response from the Iranian government or from the companies cited in Obama's order.

The United States and other Western powers suspect Iran's announced development of nuclear fuel masks efforts to build a nuclear bomb. Iran insists it is producing enriched uranium only for peaceful purposes, to fuel civilian power plants and medical reactors, and it has refused U.N. Security Council demands to halt that work.

The U.N. nuclear watchdog, the International Atomic Energy Agency, says it has "serious concerns" about possible military applications of Iranian nuclear work and has urged Iran to clear up those concerns. But several rounds of talks with Iran have failed to end the dispute.

Complicating matters, Israel -- which is widely believed to have its own, undeclared nuclear arsenal -- has hinted that it could attack Iran if sanctions fail to halt Iran's nuclear program, while Iran has threatened to close the vital oil shipping lane of the Strait of Hormuz.

In Tuesday's statement, Obama said Washington "remains committed to a diplomatic solution, but the onus is on Iran to abide by its international obligations."

"If the Iranian government continues its defiance, there should be no doubt that the United States and our partners will continue to impose increasing consequences," he said.