Faltering nuclear talks between Iran and world powers could hit a make-or-break point in their next round in Moscow, with both sides digging in and manoeuvring for elusive advantage, analysts and diplomats say.

Bluster, propaganda, media leaks and official declarations have all noticeably sharpened in the past week by both sides. The rhetorical duel has become so serious that some fear the showdown has the potential to tip from diplomacy to military action.

"As both sides escalate for leverage, the reality is that neither side has gained an upper hand," an Iran specialist at the National Iranian American Council, Reza Marashi, wrote in a piece published by a website, The National Interest.

"Both sides are nearing a critical point at which delaying the inevitable choice between military action and compromise is no longer tenable," Marashi wrote.

One Western diplomat in the P5+1 group of world powers engaging Iran confessed to AFP, on condition of anonymity: "I increasingly struggle to see a way where this doesn't end in tears."

Both the United States and its ally Israel -- Iran's arch-foe, and the Middle East's sole, if undeclared, nuclear weapons state -- have warned they are keeping the option of air strikes on Iranian nuclear facilities.

The June 18-19 talks due to be held in Moscow, then, are seen as crucial.

"We don't intend on continuing talks for talks' sake. The window (for diplomacy) is closing," the US ambassador to Israel, Dan Shapiro, told a Tel Aviv security conference on Wednesday.

The last negotiations, held in Baghdad on May 23-24, exposed a gulf between the two sides' positions that looked almost unbridgeable, and nearly caused the talks to collapse.

"Significant differences remain," EU foreign policy chief Catherine Ashton said after that round, though she claimed to see "some common ground" that could be developed in Moscow.

Ashton represents the P5+1, which comprises UN Security Council permanent members the United States, Britain, France, China and Russia, plus non-permanent member Germany.

--- 20 percent uranium the priority issue ---

The priority issue for the P5+1 going into the Moscow round is convincing Iran to give up enriching uranium to 20 percent purity and hand over its 20-percent stock in a fuel-swap deal.

Uranium enriched to 20 percent is just a few technical steps short of bomb-grade 90 percent uranium. Iran has so far produced 145.6 kilogrammes of 20 percent uranium, a third of which has been processed into fuel for its Tehran research reactor to make medical isotopes.

Iran's only other reactor, its Bushehr nuclear energy plant due to come fully online later this year after many months of delays, uses uranium enriched to a much lower 3.5 percent as fuel.

The Moscow talks "will need to deliver something decent on 20 percent, otherwise the process will just fall over," a P5+1 diplomat said on condition of anonymity in order to speak more freely. "But I fear the gap is too wide."

In Baghdad, the P5+1 called on Iran to give up its 20 percent uranium activity and stockpile in return for a few minor concessions that fell far short of the relief from Western sanctions Tehran had been hoping for.

Iran is particularly keen to stop an EU embargo on its oil that is to fully come into force on July 1.

The embargo is part of a raft of Western economic sanctions aimed at strangling Iran's oil and financial sectors, imposed on top of four sets of UN sanctions pressuring the Islamic republic to halt all uranium enrichment.

Iranian President Mahmoud Ahmadinejad on Wednesday stressed in an interview with France 24 Television that his country viewed 20 percent enrichment as "one of our rights in terms of international law."

He hinted that Iran might still negotiate on that issue, but only if the P5+1 greatly sweetened its offer.

"They have to say what they are willing to give to the Iranian people in exchange," he said.

Ahmadinejad also stated: "There have been lies about our programme... Enriching uranium to 20 percent is not a step towards a bomb."

The West fears that Iran is intent on developing nuclear weapons capability, a suspicion echoed by the UN's International Atomic Energy Agency, which has identified a "possible military dimension" to some of Iran's nuclear activities.

--- Iran and the IAEA ---

Tehran has repeatedly denied its nuclear programme is anything but peaceful and stresses that it scrupulously adheres to the terms of the nuclear Non-Proliferation Treaty supervised by the IAEA.

The IAEA, though, wants Iran to agree to inspections that go beyond that treaty, as per agreements that Tehran previously applied but later dropped.

In particular, the UN agency wants to visit an Iranian military facility, Parchin, where evidence of what could have been nuclear warhead design experiments in a special metal chamber was detected.

Iran has refused the IAEA's repeated requests this year for access to the site, emphasising that Parchin is not a declared nuclear activities site and therefore not subject to inspection without exceptional agreement.

David Albright, a former IAEA inspector now at the US-based Institute for Science and International Security, said in a report published on Wednesday that satellite images showed a clean-up operation believed to be underway at Parchin for months has expanded, with two small buildings demolished and earth displaced.

"These activities raise further concerns of Iranian efforts to destroy evidence of alleged past nuclear weaponisation activities," his ISIS report said.

--- Shadow struggle ---

In the past week, both Iran and Western powers have injected allusions and accusations into the dispute, hardening their positions ahead of the Moscow talks and trying to weaken the other side.

Iran has said it sees "no reason" to halt enrichment to 20 percent, and has announced it will soon launch another satellite into space (using the same technology as that in its sanctions-hit ballistic missile programme). It has also repeated that the Western sanctions are having no effect whatsoever.

Western media reports have, in return, highlighted the IAEA finding traces of uranium enriched to 27 percent (though analysts posited that it could be the result of an innocent technical glitch).

Those reports also claimed there was evidence that Iran or its Lebanese proxy militia Hezbollah was involved in assassination plots against Israelis and Americans in several countries.

All that seemed to be the public tip of what was a covert, shadow struggle that has already seen four Iranian nuclear scientists assassinated by motorbike assailants in Tehran in the past two years.

Another front in that struggle is the cyberwarfare directed at Iran.

This week, new and unprecedentedly sophisticated malware called "Flame" was identified as having infected computers mainly in Iran, but also in the Israel/Palestinian Territories region, Sudan and Lebanon.

The virus -- which Iran said was linked to the Stuxnet worm that knocked out hundreds of its uranium enrichment centrifuges in 2010 -- was designed for spying, according to specialist cybersecurity outfits.

It had modules allowing it to steal files, capture screens, log keystrokes, record audio through computer microphones and scan nearby Bluetooth-enable devices such as mobile phones, and it could be tweaked and controlled remotely.