Ahmadinejad's declared landslide win, which triggered riots by opposition supporters and furious complaints of cheating from his defeated rivals, will also complicate international efforts to halt Tehran's nuclear ambitions, experts said.

Although Obama has said his outreach to arch-foe Iran does not depend on its leaders, he will have to deal with a man who has been hostile to the United States, intransigent on his controversial nuclear program and vowed to "wipe out" top US ally Israel.

Obama's young administration now faces a gamble: join the chorus of Ahmadinejad's rivals who say votes were rigged and face criticism over interfering in Iran's internal affairs, or contain its indignation and face the criticism of rights advocates.

The outcome of the presidential election also spells the possibility of an escalation of violence in the Middle East, warned Karim Sadjapour of the Carnegie Endowment for International Peace.

"The process of some type of military strike on Iran, an Israeli military strike on Iran, increases significantly if Ahmadinejad remains president," he said.

The White House's initial reaction, a brief statement by spokesman Robert Gibbs, reflected the delicate balance Obama now faces.

The United States is "impressed by the vigorous debate and enthusiasm that this election generated" and continues "to monitor the entire situation closely, including reports of irregularities," Gibbs said.

Obama has made a clean break with the approach of his predecessor, George W. Bush, opting instead for a firm yet direct dialogue with the Islamic republic.

On Friday, Obama again reiterated that he would seek engagement with "whoever ends up winning the election in Iran."

But Obama's administration is "in a bind," according to former State Department policy advisor Suzanne Maloney.

"They have to deal with the Iranian power structure that exists" on key matters such as Tehran's nuclear program, Afghanistan, Iraq and oil, she said.

"It will make any further negotiating process much more difficult, it will make the effort of building public support for engagement much more difficult."

Maloney joined other experts in doubting the legitimacy of the results announced by Iranian officials and predicting a difficult road ahead.

"This is the worst result," Thomas Pickering, a former under secretary of state, told The New York Times as he commented on the vote outcome. "The US will have to worry about being perceived as pandering to a president whose legitimacy is in question. It clearly makes the notion of providing incentives quite unappetizing."

But Obama will likely continue his efforts, having said he wants to see serious progress on his diplomatic outreach by the end of the year, albeit after a possible pause of several weeks to allow the dust to settle in Iran.

In his second term, experts said Ahmadinejad may show more willingness to negotiate on his country's nuclear program, which Western powers suspect of concealing efforts to build atomic weapons, a charge Tehran vehemently denies.

But non-proliferation expert Joseph Cirincione said the Iranian president may approach those negotiations bolstered by his election victory.

"The good news is that Ahmadinejad has got his negotiating team in place and is ready to engage the Obama administration immediately," he said. "The bad news is that he is going to come back with a hard line and not be in the mood to compromise."

Since Iranian policy is set by supreme leader Ayatollah Ali Khamenei and not the president, "there is some possibility that, seeing the results and the turmoil inside Iran, the leadership might be looking for a compromise to reset Iranian foreign policy with the West," Cirincione said.

Events leading up to Friday's vote, which saw throngs of mostly young supporters of moderate ex-premier Mir Hossein Mousavi take to the streets, may have confirmed Khamenei's long-standing fears about a velvet revolution provoked by foreigners to topple his regime, said analyst Patrick Clawson.

"These events of the last two weeks will have persuaded Khamenei that he has been right for 20 years in saying that the real danger is a velvet revolution, and that the West is behind it, and that therefore there is no point in doing a deal with the West over the nuclear matter," Clawson said.

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