"I will support a bill that would broaden the scope of our current petroleum sanctions, place limitations on trade with strategic sectors of the Iranian economy that support its nuclear ambitions, as well as pursue those who divert goods to Iran," Reid said on the Senate floor.
A sanctions bill has been held up in the Senate Banking Committee for months, after President Barack Obama's administration asked for a delay to allow time to pursue a diplomatic solution to the Iranian nuclear crisis. The West says Iran is pursuing nuclear weapons, but Tehran says its nuclear program is for peaceful purposes.
The holdup by Obama's fellow Democrats, who control the Senate, angered many Republicans as well as some Democrats who threatened to push ahead with their own sanctions measures if the bill in the Banking Committee did not advance.
Members of Congress, backed by the influential pro-Israel lobby, tend to be more hawkish on Iran than the Obama administration.
Negotiators from world powers were meeting in Geneva on Thursday for a third round of talks to finalize an interim deal for Tehran to curb its nuclear program in exchange for some sanctions relief.
Reid said he strongly supports the negotiations, hopes they succeed and wants them to produce "the strongest possible agreement."
But he said he was aware that Iran could keep them from succeeding. He said he is a strong supporter of the tough sanctions regime currently in place and believed it had brought Tehran to the negotiating table.
"While I support the administration's diplomatic effort, I believe we need to leave our legislative options open to act on a new, bipartisan sanctions bill in December, shortly after we return," Reid said.
The Senate and House of Representatives are scheduled to be out of session next week for the U.S. Thanksgiving holiday on Thursday.