Transportation Minister Shaul Mofaz warned Friday that Iran is on the verge of a "major breakthrough" in its quest to produce nuclear weapons and assessed that Teheran would be able to enrich uranium to military levels as early as the end of 2009. "We won't allow a second Holocaust," declared Mofaz, who was in town for strategic dialogue talks with the US, which he said agreed with Israel that a unified policy toward Iran was needed that emphasized financial pressure but also kept all options on the table. While the diplomatic route was preferred on Iran, "even diplomacy has its limits," he said. Mofaz, however, embraced diplomacy with Syria and the Palestinians, saying that if he were to become prime minister, he'd continue talks with both parties. He expressed confidence that he would win next month's Kadima primary now that Prime Minister Ehud Olmert has announced he wouldn't run, and said he would try to create a national unity government should he prevail. Mofaz's sharp words on Iran, delivered at the Washington Institute for Near East Policy, seemed to affect international energy prices, as oil jumped $4 a barrel before evening off at just $1 more than Thursday's price. Investors signaled their concern that conflict with Teheran could send oil prices soaring. When asked about the possibility that Israel's Iran policy could contribute to spiraling energy costs at a briefing with reporters later in the day, Mofaz responded, "The existence of the State of Israel is more important than gas prices." He said Israel's red line for any deal was that the Islamic Republic not be able to enrich uranium on its own soil, and urged a further round of international sanctions. "One thing that's clear is the Iranians are continuing their policy of buying time, and so far they are succeeding," he charged. "The window of influence is becoming smaller and I believe is about to close," he said. "It's a race against time, and time is winning." But Nicholas Burns, who served as the No. 3 official at the State Department and led the American side of the strategic dialogue with Israel until he left government this spring, said there was room for diplomacy to work. "There's no question in my mind that this is a time for diplomacy and not war. We have to give diplomacy a chance, and as we watch diplomacy along the continuum. It is just getting started," said Burns, who appeared alongside Mofaz at the Washington Institute event, calling for tougher international sanctions. "There is time. There is a measure of time for diplomacy to play out."