International Atomic Energy Agency (IAEA) Director General Yukiya Amano confirmed that Iran had exceeded the limit of 300 kilograms (661 pounds) for enriched uranium.
French, British and German officials had promised a strong diplomatic response if Iran fundamentally breached the deal, but the initial European response appeared muted.
On May 8, 2018, US President Donald Trump pulled his country out of the nuclear accord.
Foreign Minister Mohammad Javad Zarif said Iran had passed the threshold, exactly as it had warned it would: "We have said very transparently what we will do".
The US withdrew from the nuclear deal previous year, and Monday's move reflects Tehran's exasperation that European Union states have been unable to do more to counterbalance the effect of US sanctions.
The United States withdrew from the nuclear deal previous year and reimposed biting sanctions on Iran's crucial oil exports and financial transactions as well as other sectors.
Under the nuclear deal, Iran is only allowed to produce low-enriched uranium, which has a 3-4% concentration.
In addition, Tehran has said that it would also start to enrich uranium above the 3.67 percent cap in the agreement in early July. The US has blamed Tehran for the attacks, which it denies.
The UK has expressed concern at the announcement, with Foreign Minister Jeremy Hunt saying Britain is "deeply worried".
Netanyahu also called upon European countries to "stand by your commitments" to impose sanctions against Iran if it violated the nuclear agreement reached with world powers in 2015.
Under the nuclear deal, the timeline for Iran's ability to create a nuclear weapon was pushed back to roughly a year.
After the talks on Friday, Abbas Araghchi, Iran's deputy foreign minister, said that Europe was not doing enough and for the INSTEX system to be useful "Europeans need to buy oil from Iran, or to consider credit lines for this mechanism".
A diplomat in Vienna, where the UN's nuclear watchdog is based, told AFP that Iranhad exceeded the limit by two kilogrammes. A threat of USA secondary sanctions has deterred nearly all large Europe firms, including banks, from trading with Iran.
Experts say Iran's nuclear developments this week still keep it roughly 12 months from producing enough material for a nuclear weapon, and add that the US and other signatories of the 2015 deal should respond accordingly.
Israel earlier urged European states to sanction Iran, while Russian Federation voiced regret, but said the move was a outcome of U.S. pressure.
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