Iranian President Mahmoud Ahmadinejad has agreed "in principle" to new talks with the major powers, mediated by Brazil, on the enriching of Iranian uranium outside the country in exchange for nuclear fuel. Last October, a deal was reached between the Group of Six Nations, the International Nuclear Energy Agency, and Iran at talks in Geneva, but the regime in Tehran later backtracked on the agreement.

Key part of that deal was to remove most of Iran's low-enriched uranium stockpile to minimize the risk of it being used for atomic bombs, while Iran would get specially processed fuel to keep its nuclear reactor for medical research running.

"In a telephone conversation with his Venezuelan counterpart [Hugo Chávez Frias], Ahmadinejad agreed in principle to Brazil's mediation over the nuclear fuel deal," the Iranian news agency ‘Fars’ reported, quoting a statement issued by Ahmadinejad's office. Brazil and Turkey, which are currently members of the United Nations Security Council, have been trying to revive the fuel deal with Iran in an attempt to stave off further sanctions against Tehran. However, Western powers have ruled out changing the deal agreed in October 2009, and many observers believe that Iran is just trying to gain more time to stave off new UN sanctions.

In an interview with the US broadcaster ABC's ‘Good Morning America’ show, however, Ahmadinejad vowed Iran would continue with its nuclear program. He said: "Iran will definitely continue its path. You should not even doubt that we will continue our path." Asked if that meant Iran was playing with fire as it faced an Israeli military strike, Ahmadinejad replied: "Those who have stockpiled their bombs and impose their will on others and act unlawfully are the ones who are playing with fire."

Meanwhile, the Iranian military on Wednesday began a series of war games in the Straits of Hormuz.