Honolulu: US President Barack Obama has signed into law tough new sanctions targeting Iran's central bank and financial sectors, in a move likely to deepen acrimony between Washington and Tehran.

The measures, meant to punish Iran for its nuclear program, were contained in a mammoth USD 662 billion defense bill, which Obama signed despite having reservations about its provisions on Iran and on detaining terror suspects.
   
The sanctions require foreign firms to make a choice between doing business with Tehran's oil and financial sectors or central bank or the mighty US economy and financial sector.
   
Foreign central banks which deal with the Iranian central bank on oil transactions could also face similar restrictions under the new law, which has sparked fears of damage to US ties with nations like Russia and China which trade with Iran.
   
The White House held intense negotiations with Congress on the terms of the law's implementation, given concern that sanctions on Iran's central bank could spark chaos in the global financial system and hike the price of oil.

Obama said in a statement issued as he signed the bill that he was concerned that the measure would interfere with his constitutional authority to conduct foreign relations by tying his hands in dealings with foreign governments.
   
The bill, which was passed with wide majorities in Congress, did reserve some wiggle room for Obama, granting him the power to grant 120-day waivers if he judges it to be in the national security interests of the United States.
   
The president signed the law in Hawaii on Saturday where he is on a vacation, at a time of rising tension with Tehran, which has threatened to block the Strait of Hormuz -- through which more than a third of the world's tanker-borne oil passes.

(Agencies)