US President Donald Trump has imposed new sanctions against Iran's metals sector, escalating tensions, with Tehran saying it will return to enriching uranium.
US President Donald Trump on Wednesday tightened the screws further on Iran with sanctions on its mining industry after a frustrated Tehran said it would suspend some promises it made under a nuclear deal rejected by Washington.
On the anniversary of Trump's withdrawal from the accord he denounced as "horrible," tensions were soaring after the United States deployed an aircraft carrier strike group and nuclear-capable bombers to the region and accused Iran of "imminent" attacks.
In an announcement previewed for days, Iran said it would immediately stop implementing some restrictions under the 2015 deal - a move aimed largely at pressing Washington's European allies to step up to preserve the agreement.
Tehran said it would abandon even more if the remaining parties to the agreement - Britain, China, France, Germany and Russia - failed to start delivering on their commitments to sanctions relief within 60 days.
President Hassan Rouhani said the ultimatum was intended to rescue the nuclear deal from Trump, whose sanctions have caused severe pain in Iran - which had anticipated an economic boon from the agreement negotiated under then president Barack Obama.
"We felt the (deal) needed surgery and that the year-long sedatives have not delivered any result. This surgery is meant to save the (deal), not destroy it," Rouhani said at a cabinet meeting broadcast live on state television.
Rouhani denounced European countries for seeing the US as the world's "sheriff" and said their view kept them from making "firm decisions for their own national interests."
Cutting Iranian exports
Trump quickly fired back as he moved to inflict greater economic pain on Iran, imposing sanctions that would punish anyone who buys or trades the country's iron, steel, aluminium and copper.
The White House had already acted forcefully to prevent all countries from buying Iran's oil - its crucial money-maker - and said that the steel and mining sector was the country's second largest source of foreign revenue, accounting for 10 per cent of exports.
"Tehran can expect further actions unless it fundamentally alters its conduct," Trump said in a statement.
But in a shift in tone, Trump - who talked tough on North Korea before two landmark summits with leader Kim Jong Un - said he was willing to negotiate face-to-face.
"I look forward to someday meeting with the leaders of Iran in order to work out an agreement and, very importantly, taking steps to give Iran the future it deserves," he said.
Observers believe it is highly unlikely that Iran's leaders - who have made hostility to the United States a bedrock principle since the 1979 Islamic Revolution toppled the pro-Western shah - would want to meet Trump, who has repeatedly threatened the country.
But Foreign Minister Mohammad Javad Zarif regularly saw his counterpart in the Obama administration, then secretary of state John Kerry, and recently dangled the prospect of a prisoner swap with the United States.
Zarif, who was visiting Moscow, accused European governments of not fulfilling their obligations under the nuclear deal.
"Our friends in Russia and China maintained very good relations with us in this year but the rest of the ... participants did not meet any of their obligations," Zarif said.
Moving limits on uranium, heavy water
Iran's Supreme National Security Council said it no longer considered itself bound by the agreed restrictions on stocks of enriched uranium and heavy water.
It said that after 60 days, it would also stop abiding by limits on the level to which Iran can enrich uranium and modifications to its Arak heavy water reactor that were designed to prevent the production of plutonium.
Uranium enriched to much higher levels than Iran's current stocks can be used as the fissile core of a nuclear weapon, while heavy water is a source of plutonium, which can be used as an alternative way to produce a warhead.
But on a practical level, Robert Kelley, a former UN nuclear inspector now with the Stockholm International Peace Research Institute, said the commitments Iran was dropping had no bearing on its ability to develop an atomic bomb.
He said that Iran was simply seeking to "save face" after "striking a deal which was not respected by the other side."
Concern in Europe
The three European parties to the deal tried to save the accord with a trade mechanism meant to bypass reimposed US sanctions, but their attempt was dismissed by Iran's supreme leader Ayatollah Ali Khamenei as a "bitter joke."
The European powers voiced alarm at Iran's statement and expressed hope that the nuclear deal could be preserved.
"It is important to avoid any action that would prevent the enactment of the obligations by parties currently upholding the agreement or that might fuel an escalation," a French foreign ministry spokesperson said.
Germany urged Iran to uphold the nuclear deal. "We as Europeans, as Germans, will play our part and we expect full implementation from Iran as well," Chancellor Angela Merkel's spokesman Steffen Seibert said.
UN Secretary-General Antonio Guterres said the nuclear accord was "a major achievement" in boosting international security and said he "strongly hopes" that it can be preserved, according to UN spokesman Farhan Haq.