The European Union expects to reach a decision by the end of January on expanding sanctions against Iran, an EU spokesman said on Sunday.

US President Barack Obama signed new sanctions against Tehran into law on Saturday, shortly after Iran signalled it was ready for fresh talks with the West on its nuclear programme and said it had delayed long-range missile tests in the Gulf.

"We expect a decision (on EU sanctions) to be ready at the latest by the next foreign affairs council on 30 January," EU foreign policy spokesman Michael Mann said in an email to Reuters.

The prospect of wider sanctions led Tehran to threaten to shut the Strait of Hormuz, through which 40 per cent of the world's oil passes, if restrictions were imposed on its oil exports.

In turn, the US Fifth Fleet said it would not allow shipping to be disrupted in the Strait.

The latest US sanctions have a measure of flexibility and officials said Washington was trying to ensure they would not harm global energy markets, where oil prices are above $100 a barrel.

Both the European Union and the United States have said they are willing to hold talks with Iran on its controversial nuclear programme, provided they are meaningful and without preconditions.

So far talks between Iran and the five permanent members of the UN Security Council - the United States, Russia, China, Britain and France - plus Germany (P5+1) have been stalled for a year.