President Donald Trump issued an executive order on Wednesday to sanction Iran's steel, aluminium, copper and iron sectors, which provide crucial foreign currency earnings for its crippled economy. Trump also threatened further action unless Tehran "fundamentally" changed its behaviour.
The move came after Tehran earlier said it was quitting parts of the 2015 nuclear agreement with world powers, which Washington abandoned in 2018 and ignited the current crisis.
The metals sector is the Islamic Republic's largest non-petroleum-related source of export revenue and represents 10 percent of its export economy, a statement from the White House said.
"Because of our action, the Iranian regime is struggling to fund its campaign of violent terror as its economy heads into an unprecedented depression, government revenue dries up, and inflation spirals out of control," Trump said in a statement.
"We are successfully imposing the most powerful maximum pressure campaign ever witnessed, which today's action will further strengthen."
'Massive step back'
After a meeting with US Secretary of State Mike Pompeo in London, UK Foreign Secretary Jeremy Hunt said the nuclear deal was "a very important achievement of Western diplomacy", though Russia and China were also part of the negotiations and agreement.
"Iran does not have nuclear weapons and its neighbours have not responded by getting nuclear weapons," Hunt said. "It would be a massive step back for the region if it became nuclearised.
"If Iran keeps to its commitments, we will keep to ours," said the UK foreign secretary. He said there was "a 60-day window" to resolve the current impasse.
Hunt pointed to Iran's faltering economy, which has been hit hard by US sanctions levelled since Trump's withdrawal from the deal, and said there would be "real consequences" if Iran were also to pull out.
"It is in no one's interest, certainly not their interest," Hunt said. "Because the moment they go nuclear, their neighbours will as well."
Pompeo's talks with UK officials - which he described as a "forthright conversation" - came exactly a year after Trump withdrew the US from the landmark multilateral Joint Comprehensive Plan of Action (JCPOA), which was designed to curb Iran's nuclear ambitions in exchange for sanctions relief.
He was seeking support from key international partners after Iran announced earlier in the day it would suspend some of its commitments made under the deal, but "the UK is making it clear that it is not changing its position," said Al Jazeera's Jonah Hull, reporting from Westminster.
"It is unsurprising that as the US seeks to ramp up pressure on Iran it would at the same time seek support from its allies. But the UK still supports the deal, and European nations continue to work on financial vehicles and methods to subvert US sanctions - obviously, the United States would like that to stop. They would like Europe to see these latest actions by Iran as evidence of non-compliance [with the deal]."
The US seems prepared for Iran to make the next diplomatic move.
"We have to see what Iran actually do," said Pompeo. "The US will wait to observe that. We've made a decision different to the UK has regarding the JCPOA, but I am confident as we watch Iran's activity that we and our partners will continue to work together."
Hunt did offer cautious but qualified support from the UK for the US position.
"Jeremy Hunt was clear that the UK will act if Iran carries out threats to resume enrichment in 60 days, and warned Iran to think 'long and hard'," added Al Jazeera's Hull.
UN Secretary-General Antonio Guterres said he hopes the nuclear deal can be saved after Iran's announcement.
UN spokesman Farhan Haq recalled that Guterres has consistently praised JCPOA as a "major achievement in nuclear non-proliferation and diplomacy and has contributed to regional and international peace and security".
"He strongly hopes that the Joint Comprehensive Plan of Action can be preserved," he added.
Across Europe, there was concern over the latest developments threatening the nuclear deal.
France's defence minister, Florence Parly, told BFMTV "nothing would be worse than Iran leaving this deal", but voiced serious apprehension over Tehran's threat to resume a higher enrichment of uranium - saying the question of new sanctions "will be raised" if the deal was not respected.
Germany, which also wants to hold onto the 2015 deal despite the US withdrawal and sanctions, also called for further escalation to be avoided.
"We have learned of Iran's announcement with great concern and we will look at this very closely now," said Foreign Minister Heiko Maas.
US to blame
Russia, meanwhile, blamed the US for Tehran's announcement. Foreign Minister Sergey Lavrov met his Iranian counterpart Javad Zarif in Moscow and said the US sanctions - stopping Western businesses operating in Iran and the export of Iranian oil - had undermined the spirit of the deal.
"The US is to blame for the situation and it makes it difficult for both Iran to fulfil its obligations and ... for the general state of the nuclear non-proliferation regime," said Lavrov.
He added the Kremlin and Tehran agreed to continue working with all remaining signatories to the deal to honour its obligations, even if the US will not return to the negotiation table.
Zarif insisted Iran's decision to partially withdraw from certain provisions did not violate the agreement, and said it had been provoked by the US. He also said Iran would uphold its obligations if European signatories to the deal upheld theirs.