BAGHDAD—Hopes for a quick diplomatic breakthrough in talks here aimed at containing Tehran´s nuclear program diminished as Iranians balked at the lack of sanctions relief in a proposal made by global powers.

Negotiations that resumed Wednesday were extended into Thursday, as U.S. and European officials said they remained committed to finding a way out of the impasse.

Iran indicated it saw an end to impending Western sanctions on Iran´s oil trade as necessary for the talks to advance. The White House stressed on Wednesday that this wasn´t an option.

"We will continue to press forward with our allies and partners with the unprecedented sanctions regime as we, on a separate track, work with our P5+1 partners to pursue an effort to resolve this conflict diplomatically," spokesman Jay Carney said. The P5+1, the group in negotiations with Iran, comprises the five permanent members of the United Nations Security Council plus Germany.

Iran is under pressure from economic sanctions and an impending European Union oil embargo and U.S. ban on transactions through Iran´s central bank, which handles oil purchases.

The U.S. has said Tehran must first take significant steps toward addressing concerns that it seeks nuclear weapons before Washington dials back sanctions.

In its proposal to Iran here on Wednesday, the P5+1 offered to ease sanctions that bar the exports of U.S.-made spare aircraft parts to Iran´s national carriers and aid for Iran´s development of nonmilitary applications for nuclear power, people briefed on the talks said.

In return, the international bloc formally proposed to Iran that it freeze production of nuclear fuel enriched to 20% purity and ship its stockpile of the fuel to a third country, Western diplomats said. The proposal package also seeks to close an Iranian enrichment facility built inside a fortified military bunker near the holy city of Qom.

Iran´s official IRNA news agency said late Wednesday that for the talks to bear results the package needed to be significantly revised. IRNA said the West was expecting more compromise from Iran and offering few incentives.

Iran´s Supreme Leader Ayatollah Ali Khamenei, who has final say on Iran´s nuclear policy, is likely to compromise only if tough economic sanctions on Iran are removed, analysts said.

"Khamenei is fully aware that if the sanctions continue the economy will collapse and he wants relief. He might not be willing to compromise to the level the West expects," said Hossein Bastani, an Iran expert and former government official now based in Paris.

Iran offered its own package on Wednesday, including what it said was a comprehensive road map of how it believed the negotiations should progress, IRNA reported. The proposal included details on what compromises Iran would make and what it expected its international counterparts to offer.

"In Iran´s package, the give and take is balanced," IRNA said.

Senior U.S. officials said late Wednesday that they viewed the talks as at an early stage and that they weren´t deterred. They also said that, unlike in previous negotiations, the P5+1 was engaged in serious discussions with Tehran.

"I would have expected nothing more than Iran to say that this [offer] was unbalanced," said a senior U.S. official involved in the talks. "This is a negotiation."

Iran, too, seemed to praise the process, saying both sides had clearly presented their positions and calling parts of the discussions transparent.

The talks sought to build on a tentative agreement reached Monday between Iran and the U.N. nuclear watchdog, the International Atomic Energy Agency, that would allow international inspectors access to sites, scientists and documents the West believes are related to an Iranian nuclear-weapons program.

EU foreign-policy chief Catherine Ashton led the P5+1 side in the talks in Baghdad´s Green Zone. She presented the group´s package to Iran´s chief nuclear negotiator Saeed Jalili, the personal representative of Mr. Khamenei.

The P5+1´s proposed moves to limit Iran´s production and stockpile of nuclear fuel were seen as necessary to reduce Iran´s ability to quickly amass the fissile material needed to develop an atomic weapon— though Tehran says its nuclear program is for strictly peaceful applications.

"There´s a new offer on the table which addresses our concerns, not the least the 20% enriched uranium," said Michael Mann, spokesman for Mrs. Ashton. "We´re hoping the Iranians will respond in a positive way."

Iranian officials have said in recent days that the international community must recognize Tehran´s right to produce nuclear fuel if the diplomacy is to move forward.

They have also demanded that the U.S. and EU ease economic sanctions that have compelled nations to cut back on buying Iranian oil, the country´s primary source of revenue.

The Obama administration has suggested it would be willing to accept Iran´s production of nuclear fuel sometime in the future, but only if Tehran agrees to rigorous international inspections and clarifies its alleged nuclear-weapons work.

—Carol E. Lee in Washington contributed to this article. (Copyright © Dow Jones & Company, Inc.) 05/24/12)