The US is weighing the possibility of unfreezing billions of dollars of Iranian assets in response to potential concessions by Tehran on its nuclear program discussed at the recently concluded nuclear talks in Geneva, The New York Times quoted a senior Obama administration official as saying on Thursday.

The move would allow Washington to give Iran some economic relief gradually without dismantling the sanctions regime which has been built internationally in the face of the Islamic Republic's failure to comply with Western demands regarding its controversial nuclear program.

The Times quoted the US official as saying the prospect of unfreezing Iranian assets was equivalent to "opening and closing a financial spigot."

Despite the Obama administration referring to the talks between Iran and the P5+1 group of world powers as the most detailed and serious to date, Washington remains reluctant to scale back sanctions without actions on the ground from Iran. However, the Times quoted Obama administration officials as saying that they are urging the US Senate to refrain from passing new oil industry sanctions against Tehran prior to the next round of nuclear talks, scheduled for November 7-8 in Geneva.

However, some senators seemed intent on moving forward with sanctions, arguing that Iran has not gone far enough in what it is prepared to concede.

The Times quoted Republican Senator Mark Kirk as saying, "Given Iran’s refusal to halt its illicit nuclear and ballistic missile programs the Senate should immediately move forward with a new round of economic sanctions targeting all remaining Iranian government revenue and reserves.”

Israel has stated that it would only accept a deal if it meant a total dismantling of the nuclear program similar to what was carried out in Libya.

Senior Western diplomat: Nuclear deal with Iran not close

A senior western diplomat cautioned on Thursday that any breakthrough in diplomacy over Iran's nuclear program was not "close", seeking to dampen expectations the next round of talks could lead to a deal.

Despite the improved atmosphere, diplomats said major differences remained between western governments, which suspect Iran's nuclear work has covert military goals, and Tehran, which denies that and demands the lifting of crippling economic sanctions.

In Brussels, a senior diplomat said the talks in Geneva - the first such meeting since relative moderate President Hassan Rouhani took office in Iran in August - had left negotiators "more reassured than we were before".

"We learned more about their program and their concerns," the diplomat said, speaking on condition of anonymity. "However, it doesn't mean we are close to a solution and that we will have an agreement next month."

In a series of meetings with Iran since last year, envoys from six world powers - the United States, Russia, China, France, Britain and Germany - have demanded that it abandon enrichment of uranium to 20 percent fissile purity, an important step on the way to producing weapons fuel, in return for modest sanctions relief.

Tehran has spurned their offer and demanded that major restrictions on trade in oil and on its banking sector are eliminated first.

Under Rouhani, Iran appears keen to push for a deal. Sanctions have drastically reduced the OPEC producer's oil export revenues and helped cut the value of its rial currency.

But Tehran remains in contravention of UN Security Council demands that it halt uranium enrichment and other sensitive nuclear activities.

Few details have emerged from the talks in Geneva this week, but in a sign of a dramatic shift from confrontation to dialogue, the two sides issued a joint statement to say that Tehran's proposals presented at the meeting were an "important contribution".

Nuclear experts and sanctions specialists from Iran and the six nations, led in diplomacy with Iran by the European Union's foreign policy chief Catherine Ashton, will meet in the coming weeks to prepare the next round of negotiations in Geneva.

Reuters contributed to this report.

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