Iran rejected a European Union offer to arrange direct nuclear talks with the U.S., senior diplomats say, risking fresh tension between Tehran and Western capitals.

Two senior Western diplomats said Iran has ruled out attending a meeting in Europe for now, saying it wanted a guarantee first that the U.S. would lift some sanctions after the meeting.

The U.S. had said it would attend the talks, which the EU had hoped to host in the coming days. However, Washington had refused to provide sanctions relief before face-to-face negotiations with Iran had taken place.

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Diplomats said Iran’s rejection didn’t kill off all hopes of direct negotiations in coming months and that Tehran’s move might be an attempt to gain leverage in future talks. Those talks could yet start before the Iranian new year in late March.

Still, Iran’s move is likely to exacerbate tensions in the coming days.

Read more at WSJ.