On December 31, 2011, 
U.S. President Barack Obama signed the 2012 National Defense Authorization Act, which includes the toughest sanctions yet against Iran’s energy sector. The act, which takes six months to go into full effect, penalizes foreign financial institutions that do business with Iran's central bank. Countries that choose to purchase Iran’s oil will be blocked from any dealings with the U.S. economy. However, President Obama has the authority to grant waivers to countries that demonstrate that they have significantly curtailed their oil purchases from Iran.
The European Union has followed America’s lead and passed similar sanctions. The sanctions are intended to force Iran to abandon their nuclear program, which the West believes is designed to produce nuclear weapons, a claim that Iran vehemently denies.
Further Reading:
The European Union Targets Iran
