Iran denies any financial irregularities, insisting it has always been ahead on payments and says the problems are on the Russian side.

The deadline for the fuel delivery is the end of March and Iran's top nuclear negotiator has deplored Russia's decision.

Pavlov said, however, that negotiations in Tehran between Atomstroiexport and Iranian officials were proving "fairly constructive".

Iranian doubts

A spokesman for the Iranian foreign ministry has said the government is not pessismistic and believes the dispute can be resolved through talks.

Ali Reza Ronaghi, Al Jazeera’s correspondent in Tehran, says that some commentators believe Russia could have problems in delivering the fuel because it is on the security council that has imposed sanctions on Iran regarding its nuclear programme.

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"It is stubbornness and pride on Iran's part that has led to this impasse, and it can only lead to disaster for Iran"

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Ronaghi says that until the March deadline, the fuel dispute is a technical issue, but once that deadline passes then the dispute will take on a political context.

He says some in Tehran believe that counting on Russia and China to dilute sanctions against Iran in the security council was the wrong decision from the start.

Elsewhere on Tuesday Manouchehr Mottaki, the Iranian foreign minister, accused Israel and the US of posing the main threats to the security of the Middle East, an allegation that prompted the delegations from those two countries to walk out during his speech.

Mottaki told the 65-nation Conference on Disarmament in Geneva that Israel was the only country in the region that refuses to accede to the Nuclear Non-Proliferation Treaty.