U.S. President Barack Obama said the United States and other nations would begin to give Iran "modest relief" on economic sanctions as long as Iran lives up to its end of an agreement reached on Sunday to start implementing a nuclear deal.

Obama's statement came as six world powers and Iran agreed on a six-month plan that would curb Tehran's most sensitive nuclear activities in exchange for some relief from oil and other economic sanctions while the parties negotiate a broader settlement on the scope of Iran's nuclear program.

The deal will come into force on Jan. 20, the Iranian Foreign Ministry and the European Union said on Sunday.

Obama said the deal was the "first time in a decade" Iran had agreed to halt progress on its nuclear program and said the agreement will help prevent Iran from building a nuclear weapon.

"With today's agreement, we have made concrete progress," Obama said in a statement, noting work now begins on the broader, long-term agreement.

"I have no illusions about how hard it will be to achieve this objective, but for the sake of our national security and the peace and security of the world, now is the time to give diplomacy a chance to succeed," he said.

Secretary of State John Kerry cautioned that the next stage in negotiations would be "very difficult."

Relief worth $7B

However, Iran will not get all of the sanctions relief until the six-month implementation period ends, a senior U.S. official said on Sunday.

Assuming the International Atomic Energy Agency (IAEA), the UN nuclear watchdog, confirms Iran is carrying out the deal, the major powers would immediately suspend sanctions on Iran's petrochemical exports, on imports for its auto manufacturing sector and on its trade in gold and other precious metals.

According to U.S. estimates, the overall sanctions relief provided to Iran under the deal is worth about $7 billion. Of this amount, $4.2 billion is in the form of access to currently blocked Iranian revenues held abroad.

"Access to a portion of these funds will be linked to Iran's progress in completing the dilution process for 20 per cent enriched uranium," said the official, referring to Iran's commitment to dilute half of its 20 per cent enriched uranium to no more than 5 per cent enriched uranium.

"Iran will not have access to the final instalment of the $4.2 billion until the last day of the six-month period," the official said.

Iran would receive first $550 million instalment of the $4.2 billion in blocked overseas funds on or about Feb. 1st, a senior U.S. official says.

The U.S. official, who spoke on condition of anonymity, described the payment schedule as follows:

  • Feb. 1: $550 million (NOTE: Feb. 1 is a Saturday, so this payment may need to happen on Feb. 3).
  • March 1: $450 million (payment for half of dilution).
  • March 7: $550 million.
  • April 10: $550 million.
  • April 15: $450 million (payment for completion of dilution).
  • May 14: $550 million.
  • June 17:$550 million.
  • July 20: $550 million (NOTE: July 20 is a Sunday, so this payment may need to happen on July 21).

Congress pushes for new sanctions

Senior officials from the European Union and Iran met in Geneva on Thursday and Friday to iron out remaining practical questions related to the implementation of the Nov. 24 deal, under which Iran agreed to curb its most sensitive nuclear work in return for some relief from Western economic sanctions.

EU spokesman Michael Mann said on Friday that any agreements would need to be validated by the governments of Iran and the six powers.

Western powers suspect Iran has been trying to develop the ability to manufacture a nuclear weapon. Iran says its program is aimed purely at civilian electricity generation and other civilian purposes.

Meanwhile, Obama also faces pressure from the U.S. Congress to pass new sanctions on Iran as a type of "insurance policy" to push Tehran to abide by the new deal.

Fifty-nine senators — 16 of them Democrats — of the 100 in the chamber have signed on to a bill that would require further cuts in Iran's oil exports.

Obama said on Sunday he would veto the bill if Congress passes it, but said the U.S. would be ready to increase its sanctions if Iran fails to comply with the terms of the six-month deal.

"Imposing additional sanctions now will only risk derailing our efforts to resolve this issue peacefully, and I will veto any legislation enacting new sanctions during the negotiation," Obama said in the statement.