The US has extended sanctions relief on Iran as part of an international nuclear accord. The economic benefits of the deal are a prime issue in Iran's presidential vote on Friday.
US Secretary of State Rex Tillerson has cast doubt on whether the deal with Iran can achieve its aims
The United States on Wednesday renewed sanctions relief on Tehran as part of an international accord with Iran over its nuclear program, just two days before Iranians head to the polls in a presidential election viewed as referendum on the deal.
President Donald Trump is reviewing the Iran nuclear deal he vowed to rip up on the campaign trail, but Wednesday's decision signals that for now he will avoid unilaterally pulling the United States out of the accord backed by five other world powers.
But in announcing nuclear related sanctions relief would remain, the State Department and Treasury Department said separate sanctions related to Iran's ballistic missile program would be imposed.
"Iran continues to pursue missile-related technologies capable of delivering a nuclear weapon," Washington's top diplomat for the Middle East, Stuart Jones, said.
The new sanctions target seven entities, including two Iranian defense officials and a Chinese firm tied to Iran's missile program. One of the defense officials was linked to weapons sales to Syria.
The United States accuses Iran of destabilizing the Middle East by supporting Houthi rebels in Yemen, the Shiite Lebanese militant group Hezbollah and Syrian President Bashar al-Assad.
"This ongoing review does not diminish the United States' resolve to continue countering Iran's destabilizing activity in the region, whether it be supporting the Assad regime, backing terrorist organizations like Hezbollah, or supporting violent militias that undermine governments in Iraq and Yemen," the State Department said in a statement.
It also said it would continue to put pressure on Iran over human rights abuses and the arrest of dual Iranian-American citizens.
The United States, Britain, France, Germany, China and Russia reached the nuclear accord with Iran in 2015. In exchange for Iran limiting its nuclear program punishing international sanctions against Iran were dropped.
The US State Department and the UN atomic watchdog, the International Atomic Energy Agency (IAEA), have said Iran is complying with the nuclear deal.
A six-month waiver of US nuclear related sanctions last renewed under former President Barack Obama would have expired if not renewed.
The UN resolution authorizing the nuclear deal prohibits Iran from testing ballistic missiles, but the wording is vague. It "calls upon" Iran not to carry out work "designed to" deliver nuclear warheads. However, Iran says its ballistic missiles are conventional weapons, not "designed to" carry nuclear warheads even if they are "capable of" delivering them.
Since Iran is not pursuing nuclear weapons and has given up its program, Tehran argues, the UN resolution does not apply to its ballistic missiles.
Wednesday's announcement comes as Iran heads to the polls on Friday in a heated race between moderate President Hassan Rouhani and a hardline candidate Ebrahim Raisi, believed to backed by Supreme Leader Ayatollah Ali Khamenei.
Rouhani placed much of his political capital on the nuclear accord and better relations with the West, promising that it would improve the economy and end Iran's international isolation.
But many of the promised benefits have failed to materialize, opening Rouhani to attacks from hardliners, clerics and Iran's powerful Revolutionary Guard.
The presidential campaign has been marked by rare public statements highlighting divisions within the Islamic Republic's political establishment. Last week, Rouhani openly accused the Revolutionary Guard of seeking to undermine the nuclear deal by launching ballistic missiles last year inscribed with "Israel must be wiped out" in Hebrew.