Iran's top national security official on Tuesday refused to rule out using oil as a weapon in the dispute over the Islamic republic's nuclear drive, saying any "radical measures" against the country would have "important consequences" for energy supplies.

Also on Tuesday, Iranian nuclear negotiator Ali Larijani said Iran will suspend its relations with the United Nation's atomic watchdog if sanctions are imposed.

"If you decide to use sanctions against us, our relations with the agency will be suspended," Larijani said of the International Atomic Energy Agency (IAEA).

The warning, made at a conference on nuclear energy in Tehran, came ahead of Friday's deadline set by the UN Security Council for Iran to freeze ultra-sensitive uranium enrichment work.

Iran has refused to do so, leaving it exposed to UN sanctions.

Iran says it only wants to enrich uranium to make reactor fuel for power plants, but the process can be extended to make weapons.

The IAEA is the agency investigating Iran's program, and any halt in relations with Iran would spell an end to international inspections and monitoring of Iran's nuclear facilities.

Germany: sanctions unlikely to work

According to Ruprecht Polenz, chairman of the German parliament's foreign affairs committee, sanctions are unlikely to work with Iran. The conservative politician said Monday that more patience is needed in dealing with Iran.

Polenz also said the United States should hold direct talks with Tehran to ease the crisis.

The US is pushing for the UN to impose sanctions, but in a situation reminiscent of the conflict over the Iraq war, it is having trouble winning support, even from its normally strong ally, Germany.

China and Russia, which both hold veto power in the UN Security Council, also oppose punitive sanctions on Iran.

"It is at least doubtful that these sanctions would be sufficient to change Iranian policy," Polenz said. "I would prefer a way to deal differently with Iran. I think we have the time to be patient."

Polenz is set to visit Iran next week following his meetings with senior US officials in Washington this week. He added that in order for sanctions to work, there would also have to be broad consensus from Arab states, and recommended that discussions about Iran be widened to include Arab nations.