Iran's President Hassan Rowhani reacted to the re-imposition of US sanctions against its oil sector by saying the country would proudly break them in what he dubbed an "economic war."

"We are in an economic war and with unity and joint efforts against the hostile enemy [the United States], we can master this crisis as well," Rowhani said to reporters on Monday.

Rowhani also added that Iran would continue to sell oil despite the sanctions.

"We are proud to break the sanctions because these sanctions are illegal and unfair and against UN resolutions. Therefore all countries should break these sanctions," he said.

The US reimposed sanctions on Iran's oil sector on Monday, marking a full return to measures that were lifted in 2015 when Tehran agreed to a multilateral deal meant to prevent it from obtaining nuclear weapons.

Iran has stuck with the deal, but the US has said it is bringing back the sanctions to curtail what it describes as the country's malign activity in the Middle East.

Businesses that violate the sanctions by doing trade with Iran risk being locked out of the US financial system.

Iran's oil exports have already dropped by a third since US President Donald Trump made clear earlier this year that he intended to withdraw from the nuclear deal. An initial round of sanctions already snapped back in August.

Israel's Prime Minister Benjamin Netanyahu on Saturday thanked Trump for re-imposing the sanctions, calling it "a historic move."

"For years, I've been calling for sanctions to be fully re-imposed against Iran's murderous terrorist regime, which threatens the entire world," he said.

"The effect of the initial sanctions is already being felt - the Rial has plummeted, Iran's economy is depressed and the results are evident. Thank you, President Trump, for this historic move."

Israeli Defence Minister Avigdor Lieberman also applauded the move in a statement on Monday.

"President Trump's bold decision is the sea-change the Middle East has been waiting for," Lieberman said.

"In a single move, the United States is dealing a critical blow to Iran's entrenchment in Syria, Lebanon, Gaza, Iraq and Yemen."

The US is expected to grant waivers to eight countries on Monday but has said the European Union will not be granted a waiver as a bloc. The waivers are expected to be given to countries in Asia and the Middle East.

Europe, China and Russia have criticized the US withdrawal from the nuclear agreement, formally known as the Joint Comprehensive Plan of Action (JCPOA), to which they too are parties. It remains unclear if Europe will be able to devise a financial mechanism to enable trade with Iran and circumvent the US measures.