(Bloomberg) --
An attack targeting Iran's primary nuclear-fuel facility and Tehran's retaliatory vow to begin enriching uranium close to weapons grade will confront diplomats seeking to revive a stricken atomic agreement when they meet on Thursday.
Envoys from Iran and six world powers will convene in Vienna for a third meeting in 10 days with the Persian Gulf once again convulsed by the crisis. They're trying to coordinate a U.S. return to the 2015 nuclear deal and Iranian compliance with its enrichment commitments. Hopes for a breakthrough are low and the immediate challenge will be to defuse tensions.
QuickTake: The Iran Nuclear Deal
The aim of getting the U.S. back to the deal, which offered sanctions relief in return for a cap on Iran's nuclear activity, was made more difficult this week. Saboteurs interrupted production at Iran's Natanz fuel enrichment plant, prompting Tehran to announce it would begin producing highly-enriched uranium. Iranian Foreign Minister Mohammad Javad Zarif warned that time was running out over the issues that have repeatedly threatened to tip Iran into open conflict with its neighbors.
Most recently, Tehran and Israel have blamed each other for tit-for-tat attacks on ships plying major maritime routes for oil. Iran also accuses Israel of being behind the attack on Natanz, an allegation yet to be confirmed. Adding to the regional tension, Iran-backed Houthi fighters in Yemen have claimed drone and missile attacks on Saudi Aramco's oil facilities -- the latest early on Thursday targeting the kingdom's refinery town of Jazan.
Europe's top diplomat Josep Borrell spoke with U.S. Secretary of State Antony Blinken on Wednesday about ways to ensure "full implementation" of the 2015 agreement. Sides are bogged down over how to synchronize the removal of U.S. sanctions, imposed unilaterally by the Trump administration, with the need for Iran to eliminate nuclear materials and capacity it developed in response.
"We're committed to pursuing that process, but the real question is whether Iran is, and we'll find out," Blinken said during a briefing at the North Atlantic Treaty Organization. He called Iran's decision to begin enriching to higher levels "provocative," and added that "the step calls into question Iran's seriousness with regard to the nuclear talks."
China, which has repeatedly called on the U.S. to rejoin the deal, said the Natanz attack had left matters at a "critical juncture."
Sunday's attack on electrical systems at Natanz, which rendered Iranian enrichment-capacity unusable, resulted in a hardening of Tehran's position, said two officials who asked not to be identified in line with diplomatic rules.
The International Atomic Energy Agency said its inspectors are "continuing their verification and monitoring activities" in Iran and visited the Natanz plant on Wednesday. Iran informed the agency just days after the attack that it will begin refining its stock of 5% enriched uranium to a 60% level of purity -- significantly closer to the 90% concentration of uranium-235 isotopes used in nuclear weapons.
© BloombergIran's 5% Enriched Uranium Stockpile
"The most recent cowardly act of nuclear terrorism will only strengthen our determination to march forward and to replace all the damaged centrifuges with even more advanced and sophisticated machines," Iran's envoy Kazem Gharib Abadi wrote in a letter to the IAEA.
The outcome of this week's meetings, attended by Iran, the U.S., France, Germany, the U.K., Russia and China, is being closely watched by oil markets for signs that an agreement could unleash exports from Iran, which possesses the world's fourth biggest oil and second biggest natural gas reserves.
(Adds Aramco attack claim in paragraph 4, Blinken paragraph 6)
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