Muhammad el-Baradei, the head of the International Atomic Energy Agency (IAEA), told journalists in Vienna that he was "encouraged that there is ongoing dialogue" with Iran.
El-Baradei was speaking ahead of a meeting of the IAEA's governing board.
The IAEA meeting in Vienna comes after EU foreign policy chief Javier Solana and Iranian negotiator Ali Larijani held two days of what were described as constructive talks on ending the standoff.
Larijani praised the outcome of the negotiations with Solana on Iranian state television on September 11, saying that "some ambiguities were removed and also agreements were reached on some principles. These principles are constructive and it shows that our common points are increasing. This is very helpful in resolving the issue."
El-Baradei said he believes "negotiations are the best option to find a durable solution."
The West wants Iran to suspend uranium enrichment before talks on implementing a Western offer of trade incentives.
Solana and Larijani said a further round of talks could take place, possibly on September 14.
In published remarks today, Russian Foreign Minister Sergei Lavrov said hope remains that Iran will agree to stop uranium enrichment.
Washington, however, wants the UN Security Council to begin talks this week on a draft sanctions resolution against Iran.
Washington accuses Iran of using its nuclear program to develop nuclear weapons. Iran denies this, saying its program is only for energy production.
WHAT DOES TEHRAN REALLY THINK? On August 22, Radio Farda correspondent Fatemeh Aman spoke with Alex Vatanka, Eurasia editor for Jane's Information Group, by telephone from Alexandria, Virginia. Vatanka discussed the possible impact that comprehensive sanctions could have for Iran.
Radio Farda: Some Iranian authorities are trying to create the impression that they aren't concerned about the possibility of international sanctions against it. They emphasize that what Iran has achieved so far has happened despite the sanctions already in place against it. Are they really not afraid of sanctions?
Vatanka: I think that what the Iranians are trying to do is to continue to play this balancing act. On the one hand, they are trying to say, "Look, we have done without you for 27 years; we can continue." On the other hand, if you look at every other major Iranian overture toward the U.S., obviously what they are hoping to do is remove those sanctions. It is the sanctions that have been the biggest obstacle to a genuine expansion in the Iranian economy. It is the sanctions and U.S. policies vis-a-vis Iran that have, for instance, kept Iran from joining the World Bank. It is sanctions and so on that have made the Iranian oil industry have such a tough time in bringing investment into the strategic oil and gas sectors. People like [former Iranian President Ali Akbar Hashemi-]Rafsanjani back in the mid 1990s even kept certain fields untouched because the idea was that U.S. companies should have those once the sanctions were lifted.
I think sanctions are quite important to the Iranians, but at the same time what they are trying to say is, "Don't assume that we are going to fall off our chair just because you mentioned the sanctions card." It is part of a kind diplomatic chess game going on by Tehran. But remember if we look and listen to Iranian reformists, this is being openly debated inside Iran. The question that is being asked of [President Mahmud Ahmadinejad and his entourage] is, "What is the ultimate objective?" Is it just Islamic independence? Is it just the ability to enrich uranium? The debate in Iran by the reformists -- and I think a lot of people would sympathize with this -- is, "What are we being sanctioned for exactly and what policies do you have to make sure that those sanctions don't hit us harder than we have already been hit?"
Remember, the big issue here is this: Iran has been sanctioned by the U.S. Iran has never faced comprehensive United Nations sanctions. The Iranian people have never suffered on a scale that the Iraqi people, for instance, suffered because of such sanctions. So it is kind of disingenuous of these senior leaders to pretend that Iran has already gone through comprehensive sanctions. Iran has not. And it will be totally different set of circumstances that will have a totally different impact on Iranian society and the economy, should the UN impose comprehensive sanctions on the country.