The US government hit Iran’s space programme with new penalties on Tuesday, even as Iranian President Hassan Rouhani called for the lifting of sanctions before any talks with Washington.
Days after a reported explosion at an Iranian missile launch site on August 29, the US State Department imposed the new sanctions.
US Secretary of State Mike Pompeo said "the United States will not allow Iran to use its space launch programme as cover to advance its ballistic missile programmes".
"Iran's August 29 attempt to launch a space launch vehicle underscores the urgency of the threat," he added.
The explosion followed Iran's failed attempt to launch a satellite in January.
US President Donald Trump tweeted last Friday about the explosion at "Site One", sending Iran "best wishes" in finding the culprit.
The designation officially lists the Iran Space Agency and two of its research institutes under Executive Order 13382 "for engaging in proliferation-sensitive activities".
"These designations should serve as a warning to the international scientific community that collaborating with Iran’s space programme could contribute to Tehran’s ability to develop a nuclear weapon delivery system," the US said.
The sanctions came as France's Finance Minister Bruno Le Maire visited Washington to hold talks with US Treasury Secretary Steven Mnuchin on Iran.
France is leading a diplomatic initiative to ease Iran's economic crisis caused by the sanctions. A French diplomat told the Associated Press that "Iran seeks to get $15 billion through oil exports". The diplomat said that a "potential credit line and US sanctions waivers still remained to be worked out".