Barack Obama, the US president, has said there is no doubt members of the Iranian government knew of an alleged plot to kill the Saudi ambassador to Washington and that they must be held accountable for the "reckless behaviour".

Obama said on Thursday that one of the suspects was an individual of Iranian-American descent and had "direct links, was paid by, and was directed by individuals in the Iranian government".

"Our first step is to make sure that we prosecute those individuals who have been named in the indictment," he said.

In addition to prosecuting the men, Obama told reporters that the US would continue "to apply the toughest sanctions and continue to mobilise the international community to make sure that Iran is further and further isolated and pays a price for this kind of behaviour".

Iran has denied the charges and expressed outrage, saying the allegations threaten stability in the Gulf, where Saudi Arabia and Iran, the biggest regional powers, are fierce rivals and Washington has a huge military presence.

Obama said evidence of Iranian government complicity had already been shared with key US allies. "There will not be a dispute" over Iran's role, Obama said.

The president said Washington would not take any options off the table in dealing with Iran, a phrase US officials regularly use toward Tehran that is diplomatic code for the possibility of military action.

US financial institutions are already generally banned from doing business with any bank in Iran, including the
central bank.

But the US Treasury said more action, if it had international support, could further isolate the institution.

The state department has said that the US has had "direct contact" with the Iranian government about the allegations.

"We have had direct contact with Iran on this issue," Victoria Nuland, the state department spokeswoman, told a news briefing on Thursday, declining to give further details.

"We are not prepared at the moment to go any further on the question of who spoke to whom, and where, but just to confirm that we have had direct contact with Iran."

'Spreading Iranophobia'

Ayatollah Ali Khamenei, Iran's supreme leader, said on Thursday that the West was trying but failing to instill "Iranophobia", in remarks that appeared to be prompted by, but did not directly address, the US allegations.

The Saudi foreign minister has said his country is weighing its response to the alleged plot [Reuters]

"The repeat of ineffective and stupid methods by hapless and distracted policymakers in the West [to spread] Iranophobia will again bear no result," Khamenei said in an army base in the western city of Kermanshah, the official IRNA news agency reported.

Saudi Arabia said it was weighing its response to the alleged plot that has increased tensions between OPEC's two top oil producers.

"We hold them [Iran] accountable for any action they take against us," Prince Saud al-Faisal, the Saudi foreign minister, said in Vienna.

"Any action they take against us will have a measured response from Saudi Arabia."

The White House maintains Iranian plotters hired a would-be assassin in Mexico.

Two men, including one who the US says was a member of Iran's Quds Force special foreign actions unit, were charged in a New York federal court on Wednesday with conspiring to kill the Saudi ambassador to the US, Abel al-Jubeir, at a Washington restaurant.

Source: Al Jazeera and agencies