He said Iran would not be given an unlimited amount of time, comparing the Iranian nuclear issue to the years of stop-and-start negotiations with North Korea about its nuclear ambitions.
"We weren't going to duplicate what has happened with North Korea, in which talks just continue forever without any actual resolution to the issue," Obama said.
He has advocated a policy of increased engagement, rather than confrontation, on thorny international issues.
Iran was supposed to export the low-grade enriched uranium to Russia and France where it could be enriched to be used as fuel in Tehran's medical-purpose reactor.
Iran rejected the offer and said instead it was prepared to directly exchange the low-enriched uranium for processed nuclear fuel, providing the swap took place on Iranian soil.
"It means that we will [instead] consider swapping the [nuclear] fuel simultaneously in Iran," Obama said.
Iran said the Islamic republic was ready for another round of talks with world powers over securing fuel for its Tehran research reactor. The first meeting was held in Vienna on October 19.
The US rejected calls for amendments and further talks on the deal, with Obama saying that time was running out for diplomacy to resolve the issue and hinted of imposing further sanctions on Iran.
Iran's foreign minister rejected talk of further sanctions, saying the West had learnt from "failed experiences" of the past.
"Sanction was the literature of the 60s and 70s," Manouchehr Mottaki, who is currently visiting Philippines, said at a news conference.
"I think they are wise enough not to repeat failed experiences," he said.