By Louis Charbonneau and Fredrik Dahl
VIENNA (Reuters) - Iran and six world powers looked set to miss Monday's deadline for resolving a 12-year stand-off over Tehran's nuclear ambitions and are already looking at a possible extension of the negotiations.
The talks in Vienna aim for a deal that could transform the Middle East, open the door to ending economic sanctions on Iran and start to bring a nation of 76 million people in from the cold after decades of hostility with the West.
The cost of failure to reach a deal could be high. Iran's regional foes Israel and Saudi Arabia are watching the Vienna talks nervously. Both fear a weak deal that fails to curtail Tehran's nuclear ambitions, while a collapse of the negotiations would encourage Iran to become a threshold nuclear weapon state, something Israel has said it would never allow.
It became increasingly clear during a week of intensive negotiations between the top U.S. and Iranian diplomats that what officials close to the talks have been predicting privately for weeks is proving to be correct: a final deal is still too far off to hammer out by the parties' self-imposed deadline.
A European official said the possibility of securing a final agreement "seems physically impossible", echoing comments by Iranian officials.
With the deadline less than 24 hours away, the issue was one of several options for negotiations raised in U.S. Secretary of State John Kerry's latest meeting with Iranian Foreign Minister Mohammad Javad Zarif, a senior U.S. official said on condition of anonymity.
The United States, Britain, France, Germany, Russia and China began the final round of talks with Iran on Tuesday to clinch a pact under which Tehran would curb its nuclear work in exchange for lifting economically crippling sanctions.
German Foreign Minister Frank-Walter Steinmeier spoke of a deep divide between Iran and the six powers, saying they were "still far apart on many issues".
But British Foreign Secretary Philip Hammond said they would launch one more attempt to get a final agreement.
"At the moment we're focused on the last push, a big push tomorrow (Monday) morning to try and get this across the line," he told reporters. "Of course if we’re not able to do it, we'll then look at where we go from there."
Some Western officials describe two possible options for a likely rollover. Under one scenario, described as the "stop the clock option", the talks would simply break off and experts from the parties would reconvene in a few weeks for another attempt.
A lengthier option would be a formal extension into next year, adding new elements to an interim accord from last year.
International Crisis Group's senior Iran analyst Ali Vaez said there could be a "no-cost extension in which the parties would continue negotiating without discussing the terms of a new interim agreement or a firm deadline, with the hope of hammering out the final agreement by the year's end".
Several Western officials have questioned the value of repeatedly extending the talks, saying there is little reason to expect the Iranians will show the flexibility needed to end the impasse in the weeks and months ahead. They have questioned the Iranian leadership's desire to compromise.
Tehran blames the West for the deadlock, saying it has consistently made unreasonable demands of Iran.
They have also warned that the upcoming change in U.S. Congress, where hardline Republicans will soon dominate both houses, means U.S. lawmakers may push for new sanctions on Iran, which the Obama administration has said could torpedo the talks.
The negotiations aim to end Western suspicions that Iran is seeking an nuclear bomb capability, while allowing Iran to have the civilian nuclear program it says is its right under international rules. Tehran denies seeking nuclear weapons.
In a breakthrough preliminary deal reached a year ago, the United States and European Union agreed to ease some sanctions on Iran while Tehran agreed to some curbs on its nuclear programs. But a final deal proved elusive, with the sides forced to extend an earlier deadline in July.
The main sticking points in the talks are the scope of Iran's enrichment program, the pace of lifting sanctions that have crippled Iran's economy and the duration of any deal.
(Additional reporting by Parisa Hafezi, John Irish and Jonathan Allen; editing by Andrew Roche)