US mulls Iran sanctions but not on oil, central bank

The United States may impose more sanctions on Iran, possibly on commercial banks or front companies, but is unlikely to go after its oil and gas sector or its central bank for now, a US official said on Tuesday.

The official spoke after the International Atomic Energy Agency, the UN nuclear watchdog, completed a new report that said Iran has worked on developing an atomic bomb design and may still be conducting relevant research.

Citing what it called "credible" information from member states and elsewhere, the agency listed a series of activities applicable to developing nuclear weapons, such as high explosives testing and development of an atomic bomb trigger.

"I think you will see bilateral sanctions increasing," the official, speaking on condition of anonymity, told the press.

However, because of Russian and Chinese opposition, chances for another UN Security Council resolution sanctioning Iran for its atomic program are slim, the official said.

The International Atomic Energy Agency document, which has been preceded by Israeli media speculation of military strikes against Iranian nuclear sites, detailed new evidence suggesting efforts to develop a nuclear arms capability.

Some of the activities may still be going on, it said.

The United States and its allies are expected to seize on the keenly-awaited IAEA report to press for more sanctions on the major oil producer. Tehran has dismissed the allegations as fabricated and baseless.

Western powers want Iran to suspend uranium enrichment activity, which can produce fuel for nuclear power reactors or provide material for bombs if refined to a much higher degree. Iran says its nuclear aims are peaceful.

Despite a brief halt in late 2010, Iran's total output of low-enriched uranium (LEU) since early 2007 rose to reach 4.1 tones in May, up from 3.6 tones in February, suggesting steady work despite technical woes and possible cyber sabotage. LEU is uranium that is enriched to a concentration of U-235 lower than 20 percent. 

Iran has also said it plans to install two new centrifuge cascades in a research and development facility at its main enrichment plant at Natanz, with more modern machines than the IR-1 model now in use.