US lawmakers on Capitol Hill have reached agreementl on a series of punitive measures against Iran which could be adopted by Congress as early as this week. Senate Banking Committee Chairman Chris Dodd and House Foreign Affairs Committee Chairman Howard Berman said they were circulating a draft bill to colleagues and added that their blueprint, which aims to tighten existing US sanctions on the Islamic republic, would give President Barack Obama "a full range of tools to deal with the threats posed by Iran."

"If applied forcefully by the president, this act will bring strong new pressure to bear on Tehran in order to combat its proliferation of weapons of mass destruction, support for international terrorism and gross human rights abuses," the two Democrats said in a joint statement.

The legislation targets firms that provide Iran with refined petroleum products, including gasoline or jet fuel. Although an oil-rich country Iran relies heavily on imports because of a lack of domestic refining capability. The bill could also see non-American banks doing business with blacklisted Iranian entities shut out of the US financial system.

White House spokesman Robert Gibbs welcomed the move. "We appreciate that House and Senate leaders have come together with a strong bill that builds upon the recently passed UN Security Council Resolution, grants the president new authority, and strengthens a multilateral strategy to isolate and pressure Iran,” he said.

Meanwhile, the Canadian government is also set to announce increased Iran sanctions. The new measures are expected to target companies that help Iran's energy sector, including oil companies, banks, shipping firms, and insurance companies.

Two weeks ago, the UN Security Council approved a resolution that called on members to expand sanctions on Iranian individuals and organizations. Last week, the European Union imposed new sanctions of its own on Tehran, targeting the Iranian energy industry as well as the transportation, banking and insurance sectors. Australia took punitive measures against Iran.

The US Treasury Department also tightened the screws on Iran, targeting insurance and oil firms and shipping lines linked to Iran's nuclear or missile programs as well as the powerful Revolutionary Guard.