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By Francois Murphy and Shadia Nasralla

VIENNA (Reuters) - Iran has challenged the need for it to ship sensitive material abroad if its stock exceeds a limit set by its nuclear deal with major powers.

The challenge raises the prospect of a confrontation with the new U.S. administration of President Donald Trump because diplomats say Iran is only months away from reaching that cap.

The 2015 deal restricts Iran's atomic activities in exchange for the lifting of sanctions against Tehran. One restriction is on its stock of heavy water, a moderator used in a type of reactor that can produce plutonium, like an unfinished one at Arak that had its core removed under the accord.

Iran has already exceeded the 130-tonne limit on its heavy water stock twice. The latest standoff with Washington over the issue was only defused in December when Iran shipped the excess amount to Oman, where the heavy water is being stored until a buyer can be found.

In a letter to the U.N. nuclear watchdog circulated to member states on Thursday and posted on the agency's website, however, Iran argued that the deal does not require it to ship excess heavy water out of the country.

"Nothing in the (agreement) requires Iran to ship out the excess heavy water which is made available to the international market but has not yet found an actual buyer to which the heavy water needs to be delivered," Iran said.

The deal says all excess heavy water "will be made available for export to the international market based on international prices and delivered to the international buyer".

Trump is a vocal critic of the deal who has said he wants to "police that contract so tough they (the Iranians) don't have a chance". His administration has stuck to the previous U.S. position.

"Any excess heavy water in excess of the firm cap of 130 metric tons cannot remain in Iran," the United States said in a statement to an International Atomic Energy Agency (IAEA) meeting last week.

Western officials say they are concerned that Tehran continues to produce heavy water far more quickly than it is consuming or selling it. It had 124.2 tonnes of heavy water on its territory a month ago.

The IAEA, which is policing the deal, told member states at a meeting on Feb. 28 that if Iran kept producing heavy water at the current rate, it would reach the 130-tonne limit by May, several diplomats who attended the meeting said.

A possible maintenance shutdown at its production plant might delay the timing slightly, some added. One diplomat said June was a more likely time for Iran to hit the cap.

(Editing by Jeremy Gaunt)

Reuters