Fresh US sanctions against Iran, targeting not only the country’s oil industry but also foreign banks have sparked a furore. China warned Washington of a worsening in Sino-American relations, while Iran said the penalties amounted to “military war.”

The new set of sanctions is aimed at forcing Iran to end its supposed development of nuclear arms. The financial penalties will target the Chinese Kunlun bank and the Iraqi Elaf Islamic bank as they have participated in million dollar transactions with Iranian banks and are as such subject to sanctions.

These banks will be cut off from the US economy in an effort to discourage them from doing business with Iran.

"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," President Obama said in a statement.