Iran appears to be holding back growth of its most sensitive nuclear stockpile by continuing to convert some of it into reactor fuel, diplomats said yesterday, potentially giving more time for negotiation with world powers.

The stock of medium-enriched uranium gas is closely watched in the West; Israel has threatened to attack if diplomacy fails to curb Iran’s programme and it amasses enough of the material – a short technical step from weapons-grade – to make a bomb.

The Islamic state says its programme is for power generation and medical purposes only, but the election of the relative moderate Hassan Rouhani as President has raised hopes that talks to address the decade-old nuclear dispute could be unblocked.

Since Iran began enriching uranium to a 20 per cent concentration of the fissile isotope in 2010, it has produced more than the 240-250kg that would be needed for one weapon.

But it has kept the stockpile below the stated Israeli “red line” by converting part of the uranium gas into oxide powder in order, it says, to yield fuel for a medical research reactor.

The diplomats, accredited to the United Nations’ International Atomic Energy Agency (IAEA), said Iran might even have stepped up this conversion in recent months.

If this is confirmed in the IAEA’s quarterly report, due around August 27-28, the inventory of 20 per cent gas will rise by less than the output, which has been about 15 kg per month. One of the diplomats suggested the stockpile may show little or even no growth during the last three months, saying: “Everyone expects there to be as much or more conversion.”