WASHINGTON - US President Barack Obama warned Iran on Thursday it would face the toughest possible sanctions for an alleged plot to kill the Saudi ambassador in Washington, as Treasury officials eyed action against the Iranian central bank.

Saudi Arabia on Thursday accused Iran of fomenting instability but pledged a "measured response" over the alleged conspiracy that has heightened tensions between OPEC's two top oil producers.

Saudi Foreign Minister Prince Saud al-Faisal, on a visit to Austria, said that the evidence showed "Iran is responsible" for the suspected assassination plan and said Tehran had tried to "meddle" in the affairs of Arab states before.

In Washington, Obama told a news conference that the United States would not take any options off the table in dealing with Iran, a phrase U.S. officials regularly use toward Tehran that is diplomatic code for the possibility of military action.

"This is part of a pattern of dangerous and reckless behavior by the Iranian government," Obama said in his first public comments on the affair.

U.S. authorities on Tuesday said they had broken up a plot by two men linked to Iran's security agencies to assassinate Saudi Ambassador Adel al-Jubeir. One was arrested last month while the other was believed to be in Iran.

Iran called the accusations a fabrication designed to create tensions in its relations with its neighbors, already under strain over its nuclear program.

"Repeating stupid and useless methods by hopeless Western policy-makers to create Iranophobia will not be fruitful and they will fail again," Iranian Supreme Leader Ayatollah Ali Khamenei was quoted as saying by the official IRNA news agency, although he did not directly address US allegations over the thwarted plot.

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