As Senate leaders weigh tighter sanctions, U.S. Treasury Secretary Jack Lew told lawmakers Iran's ability to ability to produce oil is severely curtailed.

Iran under the terms of a November 2013 agreement is allowed some oil exports in exchange for commitments to curb some of its nuclear research activity. In mid-January, Mohsen Rezaei, secretary of the influential Expediency Council, said exports have since dropped by 1.5 million barrels per day and inflicted more than $100 billion in revenue losses.

Lew testified before members of the Senate Banking Committee on the effectiveness of existing sanctions, saying Iran is exporting less than half of the oil it was in 2012 and only to six countries.

"Because Iran cannot access Western technology and services, and because it has been forced to sharply cut its oil exports, we have also seen a significant decline in its production of oil," he testified.

Iran in December produced just under 2.8 million bpd, down about 20 percent from 2011 levels, Lew said.

The World Bank said in an October report the Iranian economy is contracting, but at a slower pace than before. Sanctions imposed on the Iranian energy sector in response to its nuclear program resulted in a real gross domestic product contraction of 5.8 percent last year.

Iran, meanwhile, emerged from recession last month, which Tehran said came as a result of heavy government investments in national development projects. Non-oil exports from the beginning of the Iranian year, which starts in March, increased to $35 billion, or about 20 percent year-on-year.

With negotiations over Iran's nuclear program making slow progress, Senate Democrats said in a letter to President Barack Obama they would hold off on new sanctions to curtail Iran's ambitions for now.

The nine Senate leaders said they were "deeply skeptical" Iran is committed to showing the world its nuclear program is peaceful by the March 24 deadline agreed upon by multilateral negotiators.

"After March 24, we will only vote for this legislation [for sanctions] on the Senate floor if Iran fails to reach agreement on a political framework that addresses all parameters of a comprehensive agreement," they said. "This deadline is the critical test of Iranian intentions."