Iranian reformists have challenged President Mahmoud Ahmadinejad's hardline nuclear policy as the United States defends its imposition of tougher sanctions on Tehran for its disputed atomic work.
Washington announced sanctions yesterday against more than 20 Iranian companies, banks and individuals as well as the Defence Ministry, hoping to increase pressure on Tehran to stop uranium enrichment and curb its "terrorist" activities.
As the financial markets absorbed the implications of the action, oil rallied to a record high above $92 a barrel and the dollar tumbled to a record low.
At a meeting in Tehran, the reformist Islamic Iran Participation Front warned the country's rulers of an escalating crisis with the international community and called for a review of nuclear policy.
"The government should refrain from its adventurous policies," Mohsen Mirdamadi, the party's secretary-general, told an audience of 200 people.
In Brussels, the National Council of Resistance of Iran, Iran's emigre opposition group, said Tehran might be closer to developing nuclear weapons than the three to eight years believed by the UN nuclear watchdog.
"According to our intelligence, the Iranian regime is closer to having a bomb than what Mr El Baradei says," the council's expert, Alireza Jafarzadeh, told a news conference in the Belgian capitals, referring to Mohamed El Baradei, the chief of the International Atomic Energy Agency.
The Council welcomed the US sanctions, saying they would hit the operations of Iran's Revolutionary Guard.
US Secretary of Stage Condeleezza Rice, speaking on the "Today" show on NBC television in the US, defended the new sanctions, saying: "The international community cannot just sit idly by until we face unpalatable choices. A nuclear weapon in the hands of the Iranian regime would be deeply destabilising in the world's most volatile region."
Russian President Vladimir Putin had already criticised the move, saying it would force Tehran into a corner.
"Running around like a mad man with a blade in one's hand is not the best way to solve such problems," he said, but both Ms Rice and the White House played down any disagreement with Moscow over Iran.
"We're committed to a diplomatic process in dealing with Iran," White House spokesman Tony Fratto said. "We would never take options off the table, but the diplomatic process is what we want to move forward with."
In the latest reaction to the sanctions, China expressed its opposition, saying they could complicate the nuclear dispute with Iran.
Foreign Ministry spokesman Liu Jianchao said in a short statement published on the ministry's website: "China has always been opposed to imposing sanctions too rashly in international relations."
Iran's former chief nuclear negotiator Ali Larijani, replaced last week by Saeed Jalili although still an influential figure, said today the latest sanctions could push Tehran to rethink its cooperation with the IAEA.