Senior naval officers announced that a new medium-range missile capable of evading radar detection had been test-fired in the Persian Gulf, escalating tensions in one of the world's most sensitive and strategic waterways.
At the beginning of last year (2011), Iran claimed that it had begun the process of creating fuel plates and rods at its nuclear plant in the central city of Isfahan. The claims were given scant credence in the West because the ability to manufacture the rods is possessed by only a handful of major nuclear powers.
The process of making a fuel rod requires the conversion of enriched uranium into uranium dioxide powder, which must then be pressed into small pellets that are inserted into thin metal tubes. These are then assembled in clusters for use in the core of a nuclear reactor. The rods can be used for civilian purposes, but if reprocessed could produce fuel for a nuclear weapon.
Amid growing warnings that Iran is closer than ever to building a nuclear weapon, the EU and the United States have shown greater willingness to heed Israel's pleas for truly "crippling" sanctions.
Mr Obama's announcement caused Iran's currency, the rial, to plunge to record lows against the US dollar, raising the prospect of soaring inflation.
The European Union has hinted that it could go even further than the United States by imposing sanctions on Iranian energy exports within weeks.
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