"We now have the chance to reach an agreement that will allow sanctions to be lifted. But if we do not succeed very quickly, the negotiations risk failing," Scholz told the Munich Security Conference.

"The Iranian leadership has a choice. Now is the moment of truth."

Iranian Foreign Minister Hossein Amir Abdollahian, speaking at the same Munich gathering, said his country was "ready to achieve a good deal at the earliest possible time if the other side makes the needed political decision".

"We are very serious," he added, speaking through an interpreter.

The 2015 Iran nuclear agreement had offered Tehran sanctions relief in exchange for curbs on its nuclear programme, but the US unilaterally withdrew in 2018 under then-president Donald Trump and reimposed heavy economic sanctions.

This in turn prompted Iran to start ramping up its nuclear activities.

The outline of a new deal appears to be on the table in talks which have been held in Vienna since late November between signatories Britain, China, France, Germany, Russia -- and the United States indirectly.

- 'Flexibility' -

Iran's top diplomat said the Western countries need to show "flexibility" in the talks.

"If at this level, the Western sides don't do what needs to be done by them in practice, then they should be held responsible for the failure of the talks," he said in Munich.

A US State Department spokesperson told AFP on Thursday that "substantial progress has been made in the last week".

"If Iran shows seriousness, we can and should reach an understanding on mutual return to full implementation of the JCPOA within days," the spokesperson said, using an acronym for the 2015 deal.

But "anything much beyond that would put the possibility of return to the deal at grave risk," the spokesperson added.

Experts believe Iran is only a few weeks away from having enough fissile material to build a nuclear weapon -- even if it would take several more complicated steps to create an actual bomb.

President Joe Biden has said he is willing to return to the deal and ease some of the US sanctions, provided Tehran resumes its commitments under the agreement.

Regarding the issue of a possible prisoner swap between the US and Iran alongside the agreement, Amir-Abdollahian said "it's a completely humanitarian issue."

"Away from the talks we can do it immediately based on the agreements that had been made previously."