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(Reuters) - Oman, located strategically on the opposite side of the Strait of Hormuz from Iran, said the risk of military conflict between Tehran and the West was rising but there was still plenty of opportunity to negotiate peace.

Iran has repeatedly denied charges by Western nations it is developing the capability to build nuclear weapons, but the United States and European Union have recently imposed tougher sanctions in an effort to convince Tehran to curb its nuclear program.

"It is in the interest of both sides to come to the middle road," Yousuf bin Alawi bin Abdullah, the sultanate's minister responsible for foreign affairs, told Reuters at the Foreign Ministry in Muscat.

"We can see that the threat of an unfortunate flash of military confrontation is more possible rather than it is remote."

Oman on several occasions has acted as an intermediary between Iran and the West.

Last year, Oman's Sultan Qaboos bin Said facilitated the release of two U.S. hikers held by Tehran for spying, and three French aid workers held hostage by Yemeni tribesmen were freed in November after Oman negotiated their release.

Speculation has grown in recent months that Israel, with or without U.S. support, may launch some form of pre-emptive military strike against Iranian nuclear installations, which the Jewish state sees as a threat to its existence.

Talks over its nuclear program have been on and off over the years, but last week Iran sai... >>>