US President Donald Trump has announced he is pulling the United States out of the Iran nuclear deal, in a move set to upset America's European allies and disrupt global oil supplies.

Key points: Trump says highest level of economic sanctions to be applied

Trump says highest level of economic sanctions to be applied Sanctions set to make it harder for Iran to sell oil

Sanctions set to make it harder for Iran to sell oil Iranian President threatens to resume nuclear work

Iranian President threatens to resume nuclear work French President says European allies regret US decision

Mr Trump said the nuclear agreement was a "horrible, one-sided deal" that "didn't bring peace" and "never will".

"I am announcing today that the United States will withdraw from the Iran nuclear deal," Mr Trump said at the White House.

"In a few moments, I will sign a presidential memorandum to begin reinstating US nuclear sanctions on the Iranian regime.

"We will be instituting the highest level of economic sanctions."

Renewing sanctions would make it much harder for Iran to sell its oil abroad or use the international banking system.

Iranian President Hassan Rouhani said there was a short time to negotiate with other world powers, but if talks failed Tehran was ready to resume its nuclear work.

"I have ordered Iran's atomic organisation that whenever it is needed, we will start enriching uranium more than before," Mr Rouhani said.

He said Iran would start this "in the next weeks".

Iranian state television said the US decision was "illegal, illegitimate and undermines international agreements".

Sorry, this video has expired Iranian President says nuclear deal negotiations to restart

PM optimistic deal will survive without US

Prime Minister Malcolm Turnbull has joined European leaders in expressing regret at Mr Trump's decision to pull out of the Iran deal.

Mr Turnbull told the ABC he had "some optimism" that the nuclear agreement would survive without the participation of the United States.

"We encourage all parties to continue to comply with the deal. And we certainly are trying to support that," he said.

European countries said they remained committed to the deal and called on Washington not to prevent other countries from implementing it.

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"We urge the US to ensure that the structures of the JCPOA can remain intact, and to avoid taking action which obstructs its full implementation by all other parties to the deal," a statement provided by British Prime Minister Theresa May's office said.

The statement followed a phone call between Ms May, French President Emmanuel Macron and Germany's Chancellor Angela Merkel.

The move to withdraw is a snub to the three nations, who had tried hard to convince Mr Trump to preserve the deal.

Russia's envoy to the European Union said Moscow would also continue its efforts to keep the deal functioning.

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However, the announcement was hailed by Washington's principal allies in the Middle East: Israel and Saudi Arabia.

"Israel thinks that President Trump made an historic move," Israeli Prime Minister Benjamin Netanyahu said in a brief televised address.

"Israel thanks President Trump for his courageous leadership, his commitment to confront the terrorist regime in Tehran, and his commitment to ensure that Iran never gets nuclear weapons, not today, not in a decade, not ever."

Sorry, this video has expired Benjamin Netanyahu supports US move to withdraw from 'disastrous' Iran nuclear deal

Israel has traded blows with Iranian forces in Syria since February, stirring concern that a major escalation could be looming.

The deal between Iran and six world powers eased sanctions on Tehran in exchange for it limiting its nuclear program to prevent atomic bomb capabilities.

Mr Trump says the agreement, the signature foreign policy achievement of former president Barack Obama, does not address Iran's ballistic missile program, its nuclear activities beyond 2025 nor its role in conflicts in Yemen and Syria.

In a statement released after the announcement, Mr Obama said putting the deal at risk was "a serious mistake".

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Abandoning the Iran pact is in line with Mr Trump's high-stakes "America First" policy, which has seen the United States announce its withdrawal last year from the Paris climate accord and come close to a trade war with China.

UN chief 'deeply concerned'

Sorry, this video has expired UN spokesperson Stephane Dujarric on Donald Trump's decision to withdraw from the deal.

In a statement released shortly after Mr Trump's announcement, United Nations Secretary-General Antonio Guterres said he was "deeply concerned" by the decision to drop the deal and reinstate sanctions.

"I have consistently reiterated that the JCPOA represents a major achievement in nuclear non-proliferation and diplomacy and has contributed to regional and international peace and security," Mr Guterres said.

He urged all other parties to the deal to abide by the commitments they made and to fully support the agreement.

Earlier this month, the International Atomic Energy Agency (IAEA) reiterated that it had seen "no credible indications of activities in Iran" relevant to nuclear weapons development after 2009.

That finding came from a 2015 report into Iran's nuclear activities. The agency made the comments after Israel claimed it had evidence Iran defied the terms of the 2015 nuclear deal.

The IAEA maintains Iran is still abiding by the deal, and that its inspectors have been given access to all nuclear sites.

ABC/wires