The International Atomic Energy Agency (IAEA), in a confidential document, also reported its failed mission to Tehran this week to try and get Iran to respond to allegations of research relevant for the development of nuclear weapons.

The setback increased worries about a downward spiral toward conflict between Iran and the West, and sent oil prices higher.

"The Agency continues to have serious concerns regarding possible military dimensions to Iran's nuclear program," the Vienna-based UN body said in its latest quarterly report about Iran's atomic activities.

The UN atomic agency said it has "major differences" with Iran and "major concerns" about its nuclear program, after inspectors probing suspected weapons work returned from Tehran empty-handed.

"An intensive discussion was held on the structured approach to the clarification of all outstanding issues related to Iran's nuclear program. No agreement was reached between Iran and the Agency, as major differences existed with respect to this approach," an IAEA report said.

Iran wants more talks with the UN nuclear watchdog, its ambassador to the body said, despite what one Western envoy called “very long and fruitless” negotiations this week on addressing suspicions about Tehran’s atomic activities.

The relatively upbeat comments by Iran’s ambassador to the IAEA were in stark contrast to a terse statement issued by the UN agency on Wednesday after the two days of discussions in Tehran.

The Friday’s report to member states could form the basis for any diplomatic action against Iran at a March meeting of the IAEA’s 35-nation board, which has the power to adopt resolutions and can report a country to the UN Security Council. Iran’s envoy to the IAEA stressed the need for dialogue, warning against any “provocation” that could jeopardize this.

“Our position is that we are going to continue the talks for cooperation with the agency and we hope that this process will be successfully going on,” Ambassador Ali Asghar Soltanieh said. “We need a quiet environment, a calm environment to continue our professional work with the agency,” he told Reuters. The IAEA said no further meetings with Iran were planned, signaling frustration at the lack of progress in two rounds of talks this year. The setback has increased fears of a spiral toward conflict between Iran and the West, and sent oil prices higher.

Western diplomats suspect Iran is merely seeking “talks about talks” in an attempt to ease outside pressure on the Islamic state while it presses ahead with nuclear work which the US and its allies believe has military aims. Iran says nuclear weapons claims are baseless and its program is aimed at electricity generation and medical needs. “We try to be cooperative,” said Soltanieh. “We are dealing with the questions and we are trying to remove ambiguities.” The IAEA said Iran refused to grant it access to a military site crucial for its investigations and that there was no agreement on a way forward.

FROM: AGENCIES