Iran's UN ambassador is warning that the tensions on the Persian Gulf are "very dangerous" and said that talks with US are impossible amid the escalation of sanctions.
It comes as US President Donald Trump signed off "hard-hitting" sanctions against Iran which he says will target the country's supreme leader Ayatollah Ali Khamenei.
Ambassador Majid Takht Ravanchi said that that the new sanctions were a demonstration of "US hostility" towards the Iranian people.
Meanwhile, the US' envoy has defended the actions of the White House, saying that Mr Trump's aim is to get Tehran back to the negotiation table, and the US were seeking a diplomatic solution to their issues.
Tensions are escalating between the two countries after Tehran shot down an American drone last week.
Speaking in the Oval Office at the White House, Mr Trump said he was signing an executive order to impose fresh financial sanctions due to Iran's "increasingly provocative actions".
The president said Iran's supreme leader was responsible for "the hostile conduct of the regime" and the sanctions will deny him and his office "access to key financial resources and support".
"Never can Iran have a nuclear weapon," Mr Trump said.
"They are the number one sponsor of terror anywhere in the world."
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He added: "We do not seek conflict with Iran or any other country. I look forward to the day when sanctions can finally be lifted and Iran can become a peaceful, prosperous and productive nation."
US Treasury Secretary Steve Mnuchin said the new sanctions will lock up billions of additional dollars in Iranian assets.
However Russia has said it will counter the sanctions - which have been branded "illegal" by Moscow - and called for dialogue between the US and Iran.
Mr Trump initially told reporters the sanctions were in response to the shooting down of the $100m unmanned US drone over the Strait of Hormuz, but later claimed they would have been imposed regardless of the incident.
Iran has said the drone was flying in its airspace, which Washington has denied.
The US has sought to rally support in the Middle East and Europe for a hard-line stance against Iran that has brought it to the verge of conflict with its longtime foe.
US Secretary of State Mike Pompeo arrived in Saudi Arabia - a rival of Iran - on Monday where he met with Crown Prince Mohammed bin Salman.
The US has accused Iran of encouraging allies in Yemen to attack Saudi targets.
In a joint statement on Monday, the US, Saudi Arabia, the UAE and the UK expressed concern over the dangers posed by Iranian "destabilising activity" to peace and security in Yemen and the region.
American has also blamed Iran for attacks on tankers in the Gulf in recent weeks - for which Tehran has denied responsibility - and the US says it is building a coalition with allies to protect Gulf shipping lanes.
The White House confirmed the US launched cyber attacks against Iran, saying it disabled the country's intelligence systems which controlled its rocket and missile launchers.
However Iran claimed the cyber attacks were a failure, with the country's minister for information and communications technology saying on Twitter: "They try hard, but have not carried out a successful attack."
It comes after Mr Trump said last week that he pulled out of airstrikes in retaliation for Iran's downing of the US drone because it would have killed 150 people.
Tensions between the two countries have risen since the US pulled out of a 2015 nuclear deal that world powers signed with Iran and it has already applied crushing sanctions on the country's economy.