War games. Threats to close a key oil passageway and block a U.S. aircraft carrier from returning to the Persian Gulf. An American sentenced to death in Tehran, accused of spying. And now a breakthrough in Iran's nuclear program.

The developments portend what officials see as a momentous year ahead in the standoff between Iran and the West, as Iranian leaders appear to grow bolder despite a new round of international sanctions which, by most accounts, is taking a toll.

"There won't be taking an eye off the ball," Adm. Jonathan Greenert, chief of naval operations at the Defense Department told reporters on Tuesday. Greenert spoke after the second rescue in less than a week of Iranians in trouble in Gulf waters. "If you ask me what keeps me awake at night, it is the Strait of Hormuz and the business that is going on in the Arabian Gulf."

U.S. lawmakers and other officials say western nations, which already have been putting the screws to the regime in Tehran, must take additional steps in order to persuade the country not to go down the nuclear weapons path.

In a letter to the European Union released Tuesday, a group of bipartisan senators described 2012 as a "turning point in the confrontation between Iran and the international community." They urged the organization to impose an oil embargo on Iran and follow the U.S. lead by sanctioning Iran's Central Bank.

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"We believe that both (steps) are absolutely necessary if we are to prevent the Iranian regime from acquiring nuclear weapons and thereby foreclose either a regional war or a cascade of nuclear proliferation in the Middle East," reads the letter signed by Sens. Joe Lieberman, I-Conn.; Mark Kirk, R-Ill.; Charles Schumer, D-N.Y., and five others.

In New York, state senators on Monday passed legislation already approved by the state Assembly to prohibit state and local governments from doing business with companies that have more than $20 million in ties to Iran's energy sector.

"The Senate's swift action shows how important it is that we stand together to condemn tyrannical governments like Iran which sponsor terrorism, have attempted to acquire nuclear weapons and threaten U.S. allies like Israel, as Iran has repeatedly done," Senate Majority Leader Dean Skelos said on the Senate floor.

The move, which mirrors actions by Florida and California, comes after state Comptroller Thomas DiNapoli announced $86 billion of the nearly $150 billion state pension fund has been divested from companies involved in Iran and Sudan.

The array of actions and latest warnings -- particularly on the Republican presidential campaign trail -- highlight the West's effort to make tough choices on Iran, within a quickly narrowing window.

The latest alarm bell came Monday when the United Nations' nuclear agency confirmed that Iran had started to enrich uranium at its underground Fordo site. The level of enrichment being pursued is said to be 20 percent, far more than the 3.5 percent-level material being produced at Iran's central enrichment site.

The State Department described the development as very bad news.

Secretary of State Hillary Clinton said in a statement Tuesday that the enrichment activity "demonstrates the Iranian regime's blatant disregard for its responsibilities."

She called on Iran to stop enriching uranium and return to international talks on its nuclear program, adding that the circumstances surrounding the Fordo site are "especially troubling."

"There is no plausible justification for this production. Such enrichment brings Iran a significant step closer to having the capability to produce weapons-grade highly enriched uranium," she said.

State Department spokeswoman Victoria Nuland also said a day earlier that, "When you enrich to 20 percent, there is no possible reason for that if you're talking about a peaceful program."

John Bolton, former U.S. ambassador the United Nations under the Bush administration, said that if there is a strike, Israel is the most likely candidate to carry it out. But he said Israel risks a "nuclear response" in the event the country waits too long to launch one.

"Every day that goes by means that the military option gets less and less likely," Bolton told Fox News.

Reflecting the views of the senators who wrote to the European Union, Bolton said a nuclear Iran would trigger a nuclear race in the volatile Middle East among Iran's powerful neighbors.

"I think it's a very dangerous period. I think Iran is drawing close to the point where it will have a nuclear weapons capability," Bolton said.

On Tuesday, White House spokesman Jay Carney said the U.S. is consulting with countries like India and China on ways to keep the pressure up -- after both nations committed to stronger partnerships with Iran's oil sector.

In the meantime, Carney said, "We have effectively isolated Iran to a degree that has never before been the case. And the impact of the sanctions and the efforts that we've implemented is profound.

He added that while the military option isn't off the table, the U.S. is focused on "diplomatic, economic and other non-military actions that we can take to bring about the results that we and many, many countries around the world -- our international partners and allies -- are demanding."

Israel has not betrayed its plans, though the country's military chief of staff Benny Gantz said Tuesday that 2012 "will be a critical year" on the Iranian nuclear front, according to The Jerusalem Post.

The Institute for National Security Studies, an Israeli think tank, also claimed that Israel could still attack Iran even after an Iranian nuclear test.

"The Israeli military option is likely to be a significant lever," the group said in a report on a simulation it conducted regarding the possible responses to such a test.

The United States has not publicly signaled a shift away from the international sanctions route. Defense Secretary Leon Panetta, speaking Sunday on CBS' "Face the Nation," said that while no option is off the table, the "responsible" path is "to keep putting diplomatic and economic pressure on them," so they don't pursue a nuclear weapon. He said it's important for the international community, "including Israel," to work together.

Panetta, who said last month that Iran could develop a weapon in 2012, claimed Sunday that Iran is not currently trying to develop one.

"But we know that they're trying to develop a nuclear capability. And that's what concerns us," he said. "And our red line to Iran is do not develop a nuclear weapon. That's a red line for us."

Panetta said "they're going to get stopped" if they pursue a weapon.

Other U.S. lawmakers have pressed the Obama administration to do more. Rep. Ileana Ros-Lehtinen, R-Fla., chairwoman of the House Foreign Affairs Committee, said in a statement Monday that she is "deeply troubled by the sense of complacency that seems to describe the administration's view of Iran as undecided about whether to pursue nuclear weapons."

She said an Iran with "nuclear breakout capability" should be treated like an Iran with a nuclear weapon, and noted that Iran is making inroads into Latin America to directly threaten U.S. security.

Rep. Peter King, R-N.Y., chairman of the House Homeland Security Committee, said in a statement to FoxNews.com that "it seems apparent that Iran is seeking a nuclear weapon in the face of international condemnation and sanctions."

"While we may not yet be at risk of nuclear retaliation from Iran, the longer we wait to act, the harder it would be to destroy an Iranian nuclear arms program while keeping civilian casualties and environmental damage to a minimum," King said.

King late last year called -- to no avail -- for the United Nations to expel Iran's diplomatic officials from the U.N. mission in New York. That was after Iranian officials were tied to an alleged plot to assassinate the Saudi ambassador to the U.S.

The Republican presidential candidates meanwhile have increasingly warned about the dangers of a nuclear Iran on the campaign trail. Anti-war Rep. Ron Paul, though, has likened the rhetoric to that which poured out of Washington before the 2003 Iraq invasion.