VIENNA Nuclear negotiations between Tehran and six world powers were set to miss a midnight deadline on Monday to reach a final deal, but diplomats from all sides said they hoped for a breakthrough in the coming hours.
Iranian Foreign Minister Mohammad Javad Zarif said an agreement was possible on Tuesday, but Western and Iranian officials warned that sticking points remain, including a U.N. arms embargo, and that things could still fall apart.
The White House said significant issues remained to be resolved and Iran faced some tough decisions.
Officials close to the negotiations spoke of the increasing frustration on the part of European delegates regarding Kerry's apparent unwillingness to walk away, but the White House said "genuine progress" had been made and the U.S. negotiating team would stay in Vienna as long as negotiations remained useful.
"There, there continue to be significant issues that remain," White House spokesman Josh Earnest said. "They're not going to sign on to an agreement until all of our concerns have been addressed. And as long as they continue to make progress in doing that, then the talks will, will continue."
For days, Iran and six world powers have been close to a deal to give Tehran sanctions relief in exchange for limits on its nuclear program, but officials said success was not guaranteed.
Meetings continued late into Monday with some diplomats hoping a breakthrough could happen overnight as they continued to struggle over issues such as U.N. sanctions and access to Iranian military sites.
Earlier, U.S. Secretary of State John Kerry sat in silence when asked if the deadline might be extended or if he could rule out an extension.
His Iranian counterpart, Mohammad Javad Zarif, said "there shouldn't be any extension", according to the semi-official Fars news agency, only to add: "But we can continue the talks as long as necessary."
Zarif spoke with Kerry and European Union foreign policy chief Federica Mogherini for more than an hour.
OIL PRICES FALL
Oil markets appeared to be expecting a deal soon as benchmark Brent crude futures LCOc1 fell about 1.5 percent on the prospect that sanctions would soon be lifted, allowing Iran to expand oil sales into an already oversupplied market. [O/R]Diplomats said there were contingency plans for an announcement ceremony in the event of a deal, which would open the door to ending sanctions that have crippled Iran's economy, in exchange for at least a decade of curbs on its nuclear program.
The Western powers in particular suspect Iran may have sought to use its civil nuclear program as a cover to develop a nuclear weapons capability. Iran says the program is solely for peaceful purposes.
If no agreement is clinched by midnight, the powers will need to extend the terms of an interim nuclear deal that has already been extended three times in two weeks.
Both the Americans and Iranians have said they are willing to walk away and they could also suspend the talks for a few weeks or months, though Iran has said it opposes this and Earnest said he was not aware of any plans for a break.
Among the biggest sticking points in the past week has been Iran's insistence that a United Nations Security Council arms embargo and ban on its ballistic missile program dating from 2006 be lifted immediately if an agreement is reached.
Russia, which sells weapons to Iran, has publicly supported Tehran on the issue.
"99 PERCENT FINISHED"
Other problematic issues include access for inspectors to military sites in Iran, explanations from Tehran of past activity that might have been aimed at developing a nuclear weapon and the overall speed of sanctions relief.
Iran's Fars news agency reported that Iran was pushing for the draft U.N. Security Council resolution under discussion as part of the deal to explicitly state that Tehran's nuclear program is legal.
"The parts of the deal are there," said a senior official from one of the six countries. "We still need to put the finishing touches together. All sides have to decide now. It's time to say 'Yes'."
A senior Iranian official said 99 percent of the issues had been resolved, adding: "With political will, we can finish the work late tonight and announce it tomorrow."
Israeli Prime Minister Benjamin Netanyahu's point-man on the Iranian talks, Energy Minister Yuval Steinitz, told Israel's Army Radio he was expecting an agreement on Monday or Tuesday. He reiterated Israel's opposition to the deal.
"What is being drafted, even if we managed to slightly improve it over the past year, is a bad agreement, full of loopholes," he said. "If we call it by its true name, they are selling the world's future for a questionable diplomatic achievement in the present."
Comments from both Republican and Democratic senators on Sunday suggested that any final deal would also face tough scrutiny in the U.S. Congress.
(Additional reporting by Parisa Hafezi, Arshad Mohammed and Shadia Nasralla in Vienna, Ari Rabinovitch in Jerusalem, Dubai bureau; writing by Louis Charbonneau and Arshad Mohammed; editing by Kevin Liffey, Philippa Fletcher and G Crosse)