Iran announced a nuclear fuel breakthrough and test-fired a new radar-evading medium-range missile in the Persian Gulf on Sunday, moves that could further antagonize the West at a time when Tehran is trying to avert harsh new sanctions on its oil industry.

On Saturday, President Obama signed a law imposing tougher financial sanctions to penalize Iran for a nuclear research program that the West suspects is aimed at developing nuclear weapons.

The move could for the first time hurt Tehran’s oil exports; the European Union is due to consider similar steps soon.

As tensions have risen, Iran threatened last week to close the Strait of Hormuz, a narrow gulf shipping lane through which 40 percent of world oil flows, if sanctions hit its oil exports.

At the same time, Iran signaled on Saturday that it was ready to resume stalled international talks on its nuclear program. It says the program is completely peaceful, and, in what Iranian media described as an engineering breakthrough, state television said Iran had successfully produced and tested its own uranium fuel rods for use in its nuclear power plants.

The rods were made in Iran and inserted into the core of Tehran’s nuclear research reactor, the television reported.

Iran is trying to develop its own nuclear fuel cycle to power reactors without international help. Western countries are sceptical of some of Tehran’s engineering claims but say they fear that Iran’s enrichment of uranium to make fuel could eventually lead to its producing a weapon.

In what has become part of a pattern of saber-rattling in recent weeks, Iran is finishing a 10-day gulf naval exercise.

Deputy Navy Commander Mahmoud Mousavi told IRNA, the state news agency, that it had successfully test fired a medium-range surface-to-air missile equipped with “the latest sophisticated anti-radar technologies.”

Iran has apparently delayed pre-announced plans to test its long-range missiles during the drill, saying the weapons would be launched in the next few days. Its long-range missiles could hit Israel or U.S. bases in the Middle East.

The United States and Israel say they have not ruled out military action against Iran if diplomacy fails to resolve the dispute over its nuclear program.

Western analysts say Iran sometimes exaggerates its nuclear advances to try to gain leverage in its standoff with the West.

— Reuters