DUBAI (Reuters) - Iran announced on Sunday it would abandon limitations on enriching uranium, taking a further step back from commitments to a 2015 nuclear deal with six major powers, but it would continue to cooperate with the U.N. nuclear watchdog.

Iran had been expected to announce its latest stance on the deal this weekend. But its announcement coincided with a major escalation of hostilities with Washington following the U.S. killing of top Iranian military commander Qassem Soleimani in a drone strike on Friday in Baghdad.

State television said Iran would not respect any limits set down in the pact on the country’s nuclear work: whether the limit on its number of uranium enrichment centrifuges to its enrichment capacity, the level to which uranium could be enriched, the amount of stockpiled enriched uranium or Iran’s nuclear Research and Development activities.

“Iran will continue its nuclear enrichment with no restrictions .... and based on its technical needs,” a government statement cited by television said.

Iran has steadily overstepped the deal’s limits on its nuclear activities in response to the United States’ withdrawal from the accord in 2018 and Washington’s reimposition of sanctions that have crippled Iran’s oil trade.

Under the nuclear deal, Tehran agreed to curb its nuclear activities in exchange for the lifting of most international sanctions.

Relations between Tehran and Washington sharply deteriorated after President Donald Trump’s withdrawal of the United States from the deal. Iran has criticized European powers for failing to salvage the pact by shielding its economy from U.S. sanctions.

FILE PHOTO: The Iranian flag flutters in front the International Atomic Energy Agency (IAEA) headquarters in Vienna, Austria July 10, 2019. REUTERS/Lisi Niesner

Sunday’s statement said Tehran can quickly reverse its steps if U.S. sanctions are removed.

“This step is within JCPOA (deal) & all 5 steps are reversible upon EFFECTIVE implementation of reciprocal obligations,” tweeted Foreign Minister Mohammad Javad Zarif referencing the acronym that stands for the deal’s official name, “The Joint Comprehensive Plan of Action.”

A European Diplomat, who declined to be named, said the “deal is all but dead,” but said that Europe would do everything possible to slow proliferation and “try and save what can be saved.”

Mark Fitzpatrick, associate fellow and nuclear non-proliferation expert at the International Institute for Strategic Studies, said Iran’s latest step left room for diplomacy.

“They are not saying how far they will push the enrichment or the number of centrifuges they’ll operate,” Fitzpatrick told Reuters. “I think they have reserved a lot of room for negotiation and for taking further steps if they need to.”

‘MAXIMUM PRESSURE’

Washington says the “maximum pressure” campaign it started after withdrawing from the nuclear agreement will force Iran to negotiate a more sweeping deal, covering its ballistic missile program and its role in Middle Eastern conflicts. Iran says it will not negotiate a new deal.

Tehran has rejected Western assertions that it has sought to develop nuclear weapons.

Iran has already breached many of the deal’s restrictions on its nuclear activities, including on the purity to which it enriches uranium, its stock of enriched uranium, which models of centrifuge it enriches uranium with and where it enriches uranium.

It has, however, not gone far over the purity allowed – the deal sets a limit of 3.67% and Iran has stayed around 4.5% in recent months, well below the 20% it reached before the deal and the roughly 90% that is weapons-grade.

The deal as a whole was designed to increase the time Iran would need to obtain enough fissile material for a nuclear bomb if it wanted one – the main obstacle to producing a nuclear weapon – from around two or three months.