Speaking after the morning session of an emergency meeting of the International Atomic Energy Agency in Vienna, the agency's director-general, Mohammed ElBaradei, said the row had entered a "critical phase," but added Tehran still had a "window of opportunity" to defuse the crisis if it cleared up doubts about its nuclear intentions in the coming weeks.

The European Union-3 -- Britain, France and Germany -- submitted a draft resolution to the IAEA on Wednesday, requesting the case to be addressed by the U.N. Security Council. That wouldn't mean immediate sanctions, however, ElBaradei said in an apparent bid to ease growing tensions.

"Even those who are supporting Security Council reporting, are making it very clear that the Security Council is not asked at this stage to take any action (that could lead to sanctions), definitely not before I submit my report in March. All of them are saying that this is simply a continuation of diplomacy," ElBaradei said. "It's about confidence-building and it is not about an imminent threat."

The IAEA Thursday began a two-day session on the conflict over Iran's uranium enrichment program. The EU-3 had called for the meeting after the negotiations with Iran had dead-ended last month when Teheran broke IAEA seals on its nuclear facilities and said it would resume uranium enrichment, which it had suspended under a deal with the EU. Iran is allowed to enrich uranium under its international treaty obligations.

The Iranian leadership meanwhile threatened to cut diplomatic ties with the West if it was hauled before the 15-nation council. The IAEA's decision could be delayed until Friday, but it is likely the draft resolution will pass.

Even a referral to the Security Council would give the international community roughly a month to end the conflict diplomatically.

ElBaradei said he hopes Teheran would take Russia up on its offer to enrich uranium on Russian soil, a back-door way out of the crisis supported by Washington and the EU-3. The compromise is set to be discussed later this month.

Washington has sided with the EU-3 and expressed its commitments to the UNSC to handle the case.

In an interview published Thursday in German news magazine Stern, Sen. John McCain, R-Ariz., said U.S. citizens should be prepared for sacrifices in case of economic sanctions that may stop Iranian oil exports.

"In the worst case we have to accept worldwide shortage of Iranian oil," he said. "Then oil prices in the United States would rise as well. Americans have to be ready for that."

Washington has said it won't exclude military options in case Iran builds a nuclear bomb. The United States and the EU say Iran has a secret and illegal nuclear weapons program, a charge Tehran denies. Iranian President Mahmoud Ahmadinejad, who has in the past called for Israel to be "wiped off the map," says his country wants nuclear program only to generate civilian power.

In Germany, Chancellor Angela Merkel urged Teheran to make use of diplomacy and not further fuel the conflict with rhetoric.

"I can only warn Iran against refusing to cooperate with the international community and the IAEA," she said, according to Deutsche Welle.

Iran's ambassador to the IAEA, Ali Soltanieh, told the BBC he was sure Russia and China would side with Iran in case the UNSC debates possible sanctions.

That belief is shared by Erwin Haeckel, Iran expert at the German Council on Foreign Relations.

"The Western countries are not so eager to have to make a decision in the Security Council," he told United Press International Thursday from his office in Bonn. "Giving a monthlong leeway until such a decision seems to be a reasonable option."

He added the council had little leeway as China and Russia may block sanctions.

"And what else could the body do? If it's just issuing a warning or voicing its concern, as happened in the row with North Korea, then that won't help."

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