The Trump administration on Monday told five nations, including allies Japan, South Korea and Turkey, that they will no longer be exempt from U.S. sanctions if they continue to import oil from Iran.
President Donald Trump has decided not to reissue the waivers when they expire in early May, White House press secretary Sarah Sanders said.
"The decision is intended to bring Iran's oil exports to zero, denying its principal source of revenue," Sanders said in a statement.
Secretary of State Mike Pompeo claimed the sanctions have already cost Iran around $10 billion, as he told a press conference the US would not grant anymore exemptions.
"Any nation interacting with Iran should do its due diligence and err of the side of caution. The risks are simply not going to be worth the benefits," he said.
Pompeo said the U.S. had gained assurances from oil producers - namely Saudi Arabia and the UAE - to ensure a sufficient supply to minimise impact on pricing.
He added the length of the sanctions being at zero depends on the Iranian Ayatollah and "his cronies" meeting certain demands.
These demands include Iran ending its pursuit of nuclear weapon, stopping development of ballistic missiles, stopping sponsoring and committing terrorism and stopping arbitrary detention of US citizens.
The U.S. had granted eight oil sanctions waivers when it re-imposed sanctions on Iran after Trump pulled out of the landmark 2015 nuclear deal.
They were granted in part to give those countries more time to find alternate energy sources but also to prevent a shock to global oil markets from the sudden removal of Iranian crude.
Since November, three of the eight — Italy, Greece and Taiwan — have stopped importing oil from Iran. The other five, however, have not, and have lobbied for their waivers to be extended.
NATO ally Turkey has made perhaps the most public case for an extension, with senior officials telling their U.S. counterparts that Iranian oil is critical to meeting their country's energy needs. They have also made the case that as a neighbor of Iran, Turkey cannot be expected to completely close its economy to Iranian goods.