WASHINGTON - The US government on Monday announced that it will slap sanctions on Iran's energy sector and warned the financial firms in the world against dealing with the Islamist state.

US Secretary of State Hillary Clinton listens as Treasury Secretary Tim Geithner (R) announces new steps the United States is taking to increase pressure on Iran at the Treaty Room of the US State Department in Washington, November 21, 2011. [Agencies]

"Recent days have brought new evidence that Iran's leaders continue to defy their international obligations and violate international norms," State Secretary Hillary Clinton said at the State Department, referring to the recent alleged plot to assassinate the Saudi ambassador in the US, and report by UN nuclear watchdog on Iran's nuclear program.

"There have to be consequences for such behavior," said Clinton, warning that "If Iran's intransigence continues, it will face increasing pressure and isolation."

"Today the United States is taking a series of steps to sharpen this choice," she said, citing the executive order by US President Barack Obama which for the first time specifically targets Iran's petrochemical industry, and also expanded sanctions on Iran's oil and gas business.

Alongside Clinton, US Treasury Secretary Timothy Geithner warned the financial institutions around the world of the serious risks of "doing business with Iran."

"If you are a financial institution anywhere in the world and you engage in any transaction involving Iran's Central Bank or any other Iranian bank operating inside or outside Iran, then you are at risk of supporting Iran's illicit activities, its pursuit of nuclear weapons, its support for terrorism and its efforts to deceive responsible financial institutions, and to evade sanctions, " said Geithner.

"Any and every financial transaction with Iran poses grave risk of supporting those activities," he added.

Clinton described the new sanctions as "a significant ratcheting up of pressure on Iran, its sources of income and its illegal activities."

"The impact will only grow unless Iran's leaders decide to change course and meet their international obligations," she warned.