The Pentagon said on Tuesday that Iran has the ability to launch a ballistic missile capable of hitting sections of eastern and southern Europe.
Air Force Lt Gen Trey Obering, director of the Missile Defense Agency, told reporters he believes Iran now has a missile with a range of 1,250 miles, but he declined to say whether the weapon has been test-fired.
Iran said last week it conducted two missile tests involving a number of weapons including what Iranian state television called a "new" Shahab-3 missile, a medium-range missile that could be used to strike Israel.
Tensions over Iran's missile arsenal and accusations from the United States and its allies that Tehran is pursuing nuclear weapons have roiled international financial markets with fears of a possible military confrontation.
Iran denies it wants nuclear weapons and says its nuclear program is designed to produce electricity to increase its output of oil and natural gas.
Older versions of the Shahab-3 have a 800-mile (1,300-km) range. But a new extended version is believed to have a range of up to 1,250 miles, making it capable of hitting targets as far away as Greece, Serbia, Romania and Belarus.
Iran is also developing a solid-fuel missile known as the Ashura with a range of 1,250 miles, according to the Pentagon.
US officials and independent missile experts have said last week's tests involved no new or enhanced technology, or even the latest generations of missiles known to be in Iran's arsenal.