Sanctions, Threats and Oil:

The clock has begun ticking towards a crucial deadline for Europe to fulfill Iran's demands to deliver concrete financial incentives in order to stop the 2015 nuclear deal from falling apart.

But with the early-September date looming, the outlook for the landmark pact signed between Tehran and world powers is growing increasingly bleak.

"I am not very optimistic, because there is not much the EU can do to prevent the US sanctions," Ali Noorani, a Tokyo-based Iranian analyst, said, referring to the series of punishing measures re-imposed by Washington following its unilateral withdrawal from the deal in May last year.

The accord, which was also signed by Britain, France, Germany, Russia and China, had offered Iran relief from global sanctions in exchange for limits on its nuclear programme. Trump said he withdrew because the deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), did not do enough to curb Iran's ballistic missiles programme or address its support for regional armed groups.

His administration has since launched a "maximum pressure campaign" aimed at slashing Iran's oil exports to zero, including by threatening to target any companies or countries that skirt US sanctions, and forcing Tehran to open negotiations on a broader new deal.

Amid a flurry of diplomatic activities, the European signatories to the JCPOA have tried for months to convince Iran to stay in the deal, including by launching a financial mechanism to maintain limited trade with it.

But observers believe that unless Tehran promptly gets substantial benefits for its sanctions-hit economy, in exchange for giving up its large-scale nuclear enrichment under the pact, then Europe's ongoing effort would not be enough.

"To the Iranians, this is a cruel joke. Iran needs and expects tangible sanctions relief in line with what is required by the nuclear deal,"Â Sina Toossi, of the Washington DC-based National Iranian American Council (NIAC), said.

He added that it is "unlikely" Europe will be able to accomplish what Iran is asking, namely oil purchases and the normalisation of banking ties.Â

"The fact is that European leaders have not shown the political will necessary to assert their independence vis-a-vis the US and forcefully push back against the threat of secondary sanctions," Toosi said.

Flurry of diplomatic activitiesÂ

Diplomatic efforts have intensified since July 7, when Iran increased the level of uranium enrichment from 3.67 percent to 4.5 percent - just above the limit set under the deal - following the expiration of a two-month deadline it had set to European powers to protect it from US sanctions. The following day, Tehran gave Europe another 60 days to come up with a mechanism to facilitate oil trade amid growing US-Iran tensions and international fears that hawks in Washington are attempting to draw the countries into an armed confrontation.

Iran's seizure of a foreign tanker, which was reported on Thursday, as well as the recent incidents of cargo ship attacks and drone shooting in waters off Iran, have also added to the atmosphere of insecurity and fuelled doubts that a diplomatic solution could ever be put together, observers said. Late on Thursday, it was also reported that a US warship destroyed an Iranian drone in the Strait of Hormuz.Â

Iran's Supreme Leader Ayatollah Ali Khamenei on Tuesday made it clear that his country would continue to roll back its commitment under the JCPOA, pointedly blaming Europe for not fulfilling their part of the bargain and lashing out at Western "arrogance" and "insolence".

A day earlier, Iranian President Hassan Rouhani also struck a defiant tone, saying Tehran was willing to restore its full compliance of the nuclear agreement, only if the US lifted oil and banking sanctions and returned to what was agreed in 2015.

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During a visit this week to the United Nations' headquarters in New York, Foreign Minister Mohammad Javad Zarif repeated Rouhani's call, saying that "once the sanctions are lifted ... the room for negotiation is wide open".

"It is the United States that left the bargaining table. And they're always welcome to return," Zarif said, noting that the US "shot itself on the foot" when it abandoned the JCPOA. As it is, Zarif said, the Trump administration was already waging an economic war against the Iranian people.

In a separate interview, Zarif ominously warned that while his country will not initiate an armed conflict, "anybody who starts a war with Iran will not be the one who ends it."

European foreign ministers have been scrambling to find a solution to the worsening crisis. On Monday, they huddled in Brussels and urged Tehran to avoid more actions that endanger the deal. Yet again, they failed to spell out specific economic steps to satisfy Iran.

In response, Iranian Foreign Ministry Spokesman Seyed Abbas Mousavi said Europe should not have an "unrealistic expectation", if they are unable to deliver on their promise. He said Iran would only stay committed to the deal in the same level as Europe kept its obligations.

Iran has already stated that INSTEX, the special purpose vehicle created by Europe to process payments bypassing the US financial system, is insufficient as it only allows trade for humanitarian activities that are not even covered by US secondary sanctions. Instead, Iranian officials want the workaround mechanism to cover the key oil trade.

Following Monday's meeting in Brussels, British Foreign Secretary Jeremy Hunt signaled more diplomatic efforts ahead saying, "there is still some closing, but small window to keep the deal alive."

The bloc's top diplomat, Federica Mogherini, also downplayed Iran's breach of the enrichment level on July 7, saying the UN nuclear watchdog did not deem the recent move "to be significant non-compliance". So for now, no EU penalties are in the works against Iran, she added.

'On the edge'

On Iran's part, the incremental steps taken to walk away from the deal are meant as a leverage to push Europe into action, said Noorani, the Tokyo-based Iranian journalist.

"I think Iran is on the edge now," he said.

If Europe fails to deliver in the next few weeks, and Trump piled on more pressure, "Iran will have no recourse but to increase its own pressure, by increasing its nuclear capability," added Toossi, of NIAC.

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Among the options Iran is reportedly considering is raising uranium enrichment to 20 percent, which is the level maintained before signing the JCPOA in 2015. Some experts, however, disputed that number, calling it "hype" aimed at the Europeans.

Ultimately, it may not be up to Europe, but Trump to roll the dice and talk to Iran, said Abas Aslani, a Tehran-based foreign policy expert affiliated with the Rouhani administration.

"He has to make a decision to accept the reality, to come to talk to Iran," Aslani said, while pointing to the hurdles faced by the US president.