Iran announced a major boost in oil production on Monday after the lifting of sanctions under its nuclear deal, while condemning new USA measures against its missile programme.

At the same time, four Iranian-Americans were freed in a prisoner swap as part of the deal-among them was Washington Post Reporter Jason Rezaian. Obama said the test was a violation of Iran's "international obligations".

Just hours before Obama's final State of the Union address, Iran seized two U.S. Navy boats and 10 sailors who had drifted into the country's territorial waters.

Iran's Foreign Ministry spokesman Hossein Jaberi Ansari said that the USA sells weaponry worth tens of billions of dollars to their allies in the Middle East each year.

The US had launched the sanctions on Sunday amid worries that Iran's ballistic missile program would be used to carry atomic warheads.

Yet underscoring the strain that continues to exist between the US and Iran, the Obama administration also announced new penalties Sunday on 11 individuals and entities involved in Tehran's ballistic missile program.

Iran's Foreign Ministry also said that the country would not negotiate with the US on other issues, while sanctions introduced by the Washington, which Iran called "propaganda measures", would be met with a firm response.

"The Iranian missiles have never been designed for carrying the nuclear weapons and does not go counter to any global principles", Ansari stressed.

"They're civilians, and their release is a one-time gesture to Iran given the unique opportunity offered by this moment and the larger circumstances at play", he said. That includes Saeed Abedini, a pastor from Boise, Idaho whose jailing galvanized U.S. Christians, who was released after more than three years in an Iranian prison.

US President Barack Obama praised the deal as a breakthrough in diplomacy, but noted that "profound differences" with Tehran remained over its "destabilising activities".

He also said Saturday marked a "milestone" in making sure Iran doesn't get a nuclear weapon.

Meanwhile, action on the nuclear deal continued, as the head of the International Atomic Energy Agency (IAEA) arrived in Tehran Monday, to discuss further inspections of Iran's nuclear facilities under the deal.