"From 7 July, Iran's enrichment level will not be 3.67 per cent," as required to make reactor-grade nuclear fuel, "but we will take the next step," state media quoted Mr Rouhani as saying at a weekly cabinet meeting.
"We will stop being committed to the enrichment cap. We will enrich as much as we want and will increase it based on our needs."
An increasing stockpile and higher enrichment shrinks the estimated one-year window Iran would need to produce enough material for a nuclear bomb, something Tehran denies it wants but the nuclear deal sought to prevent. Iran requires at least 1,200kg of reactor-grade fuel to make fissile material for one nuclear bomb, but would have to further refine the uranium to 90 per cent purity.
Iran on Monday increased its stockpile of reactor-grade uranium beyond the 300kg limits permitted under the 2015 nuclear deal, challenging Mr Trump's’ “maximum pressure” campaign, and forcing the European Union, the UK, France, and Germany to decide whether to defy US sanctions or allow for the collapse of the nuclear deal, called the Joint Comprehensive Plan of Action (JCPOA).
Under the terms of the JCPOA, Iran was to put strict limits on its nuclear programme in exchange for financial benefits. But the Trump administration withdrew from the deal more than a year ago, and stepped up restrictions on Iran and any company that does business with it.
European diplomats on Friday announced the launch of Instex a financial bartering mechanism that would allow Europeans to bypass US sanctions, but Iranians say it is not enough for them to keep up their end of the bargain.
Mr Rouhani also warned that after 7 July, which marks the 60-day deadline Tehran had set for Europeans to comply with the deal, Iran will begin plans to "modernise" the dormant Arak heavy-water reactor, which can be used to produce weapons-grade plutonium. Under the terms of the JCPOA, European powers were supposed to help Iran retrofit the reactor for civilian purposes. But the plans have been stymied by US removal of waivers on sanctions for nuclear cooperation with Iran.
Iranian authorities are livid with European signatories to the deal for mostly abiding by unilateral US extraterritorial sanctions on Iran and failing to bolster trade with the country.
Mr Rouhani, in his speech on Wednesday, said lowering Iran's commitment to the deal was Tehran's attempt to salvage it by maintaining what he described as "balance."
"Lowering the level of Iran's commitments is not meant to damage the JCPOA, but to save it," he said.
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