Acting at the last minute, the Obama administration on Thursday spared China and Singapore from potentially onerous financial penalties required under a strict American law on Iran sanctions, saying that both countries had earned an exemption by significantly reducing their purchases of Iranian crude oil.

Secretary of State Hillary Rodham Clinton announced the waivers for China and Singapore in a statement as the American law, aimed at severely reducing Iran's ability to export oil, its economic lifeline, formally took effect. The law is part of a coordinated Western effort to pressure Iran economically because of its disputed nuclear program. The European Union will impose an embargo on Iranian oil starting this Sunday.

The measures are sure to compound economic pain in Iran, where oil exports this year compared with 2011 have plunged by 40 percent, according to the International Energy Agency.

The American waiver granted to China, Iran's top customer of oil, was regarded as especially significant because it averted a potentially serious collision between China and the United States, which are both members of the group of six big powers that are negotiating with Iran in the nuclear dispute. Under the American law, banks of countries that are Iranian oil importers can be denied access to the American banking system.

Eighteen countries had previously been granted exemptions because they had significantly reduced their Iranian oil purchases.

"Their cumulative actions are a clear demonstration to Iran's government that Iran's continued violation of its international nuclear obligations carries an enormous economic cost," Mrs. Clinton said in the statement. With the European Union embargo, she said, Iran "will understand even more fully the urgency of the choice" it faces "and the unity of the international community."

The European embargo could be far more harmful to Iran than the American measure because it also applies to European maritime insurers, which cover the vast majority of global oil shipments. Many non-European customers of Iran have been scrambling to find alternative ways to insure their purchases. South Korea, for example, which is among the countries that have been granted a waiver under the American law, has said the European embargo will force it to halt purchases of Iranian oil.

The stronger sanctions are taking effect as Iran and the six powers, known as the P5-plus-one because they include the five permanent members of the United Nations Security Council plus Germany, prepare for a low-level meeting in Istanbul next week to try to advance the nuclear negotiations, which remain stalled after three rounds of talks.

Iran has refused to accept Security Council resolutions demanding that it halt all uranium enrichment and prove the activity is for peaceful purposes, as Iran has repeatedly claimed.

Iran's lead nuclear negotiator, Saeed Jalili, said in a letter to Catherine Ashton, the European Union's foreign policy chief, that Iran regarded the new sanctions as "illegal tools instead of logic in the negotiations," Iran's state-run Press TV broadcaster reported.

Iran's oil minister, Rostam Qasemi, said that if South Korea made good on its intention to stop buying Iranian crude oil, "there will be a reconsideration in ties with this country," the official Islamic Republic News Agency said.

The timing of the Obama administration's decision to grant China an exemption partly reflects the difficulties the Americans have faced in persuading China to curtail its Iranian oil purchases. China can exert enormous economic leverage on Iran. But it has publicly criticized the Western sanctions, saying they have only exacerbated tensions with Iran.

At the same time, China is engaged in a pricing dispute with Iran, which partly explains its reduced purchases this year.

Senior administration officials said they believed China had made a sincere effort to reduce its purchases in part because of the new American law. They cited Chinese data showing that China's purchases had declined by 25 percent in the January-May period compared with the same period in 2011, and that China expected further declines this year.

Alireza Nader, an Iran analyst at the Washington offices of the RAND Corporation, a research group, called the waiver expected. "We don't want to sanction China, but we also want to reduce purchases of Iranian oil," he said. "For now, what China has done has helped the sanctions."