The legislation, which had the backing of many Democratic and Republican Senators, focused on foreign banks that handle transactions for the National Iranian Oil Company (NIOC) as well as the National Iranian Tanker Company (NITC), and included a host of measures aimed at closing loopholes in existing sanctions, Reuters reported.
After Senators started to discuss new sanctions, Senator Rand Paul formally objected to taking up the legislation unless the Senate would also consider his amendment to it saying that nothing in the bill could be construed as an authorization of war against Iran or Syria.
Republican Senator Rand Paul, the son of Ron Paul who is currently running for president of the United States, effectively blocked the bill from advancing with his objection.
The Senate Banking Committee had easily passed the sanctions bill on February 2 after the full House of Representatives passed it in December 2011.
Before Paul blocked the bill, Majority Leader Senator Harry Reid said Democratic senators had agreed to move forward without offering any amendments, which could speed a vote.
The US and its European allies claim that Iran's nuclear energy program includes a military aspect and have imposed international as well as unilateral sanctions to make Tehran give up its nuclear energy program.
New unilateral sanctions imposed by the US and European Union on Iran since the beginning of 2012, seek to prevent other countries from importing the Iranian crude or dealing with its banks, including the central bank.
Iran refutes such claims arguing that as a committed member of International Atomic Energy Agency (IAEA) and a signatory to the Non-Proliferation Treaty, it is entitled to the peaceful uses of the nuclear energy.
Tehran also points out that despite repeated inspections; the IAEA has never found evidence pointing to diversion in Iran's nuclear energy program towards military objectives.