Iran has suspended key commitments under the 2015 international nuclear deal, a year after it was abandoned by the US.
President Hassan Rouhani said he would keep enriched uranium stocks in the country rather than sell them abroad.
He also threatened to resume production of higher enriched uranium in 60 days.
According to BBC, the accord was aimed at curbing Iran’s nuclear ambitions in return for sanctions relief. Iran-US tensions have risen since Washington quit.
Iran’s economy has since been hit by renewed US sanctions.
Iran informed the remaining parties to the deal – France, Germany, Russia, China and the UK – of its decision on Wednesday morning.
In response, French Defence Minister Florence Parly told French media that the European powers were doing everything they could to keep the deal alive but there would be consequences and possibly sanctions if the deal was not adhered to.
Iran’s announcement comes after US Secretary of State Mike Pompeo made an unscheduled visit to Iraq, and a US aircraft carrier was deployed to the Gulf region.
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US officials have reported threats to US forces and their allies from Iran, but have given few details about the exact nature of the threat.
What did President Rouhani say?
Mr Rouhani said he was suspending two parts of the deal, which is known as the Joint Comprehensive Plan of Action (JCPOA), that Iran was adhering to – the sale of surplus enriched uranium and heavy water.
He then gave the European powers, Russia and China 60 days to meet their financial and oil commitments to the deal. If they did so, Iran would resume the sales.
If, however, those commitments were not met and the powers chose to follow US sanctions, he said Iran would begin higher enrichment of uranium, which is currently capped, and begin developing its Arak heavy water reactor based on plans made prior to the deal.
But the Iranian president said Iran was not pulling out of the deal.
“We do not want to leave the agreement. All the people of the world should know that today is not the end of the JCPOA; it is a new step within the framework of the JCPOA,” he said.
However, he said the five powers would face a “very decisive reaction” if Iran’s nuclear case was referred to the United Nations Security Council.