"No one wants this to fall apart"

VIENNA -- Hopes were dim Monday morning in Vienna that any significant deal might be reached for the West to ease sanctions against Iran in exchange for limits on the Islamic Republic's uranium enrichment program. And then, hours before a deadline imposed by the negotiators themselves came to pass, they agreed to simply keep talking for another seven months.

Secretary of State John Kerry and Iran's top diplomat were directly negotiating the deal in Vienna, with no advisers or even note-takers in the room, reports CBS News correspondent Margaret Brennan. Hammering out a deal is a major foreign policy goal for both President Obama and his Iranian counterpart Hassan Rouhani.

If they had failed to reach any deal at all, Brennan says it could have tipped the already-volatile Middle East toward a nuclear arms race.

Diplomats had signaled signaled for several days, however, that the talks would likely be extended past the Monday night deadline, and State Department spokeswoman Jen Psaki said an 11th hour breakthrough was still possible.

"There's an acceptable deal within reach, the question is whether we need more time, and that's what we're going to spend the final hours figuring out," Psaki said. "No one wants this to fall apart, everyone wants to get to a point that both sides can accept."

As the hours ticked by, however, it was clear no 11th hour deal was coming on Monday.

Diplomats told both the Associated Press and Reuters on Monday that the sides had agreed to a considerable extension of the talks -- prolonging the negotiations well into the summer. A diplomat told the AP that the most basic elements of a deal should be agreed to by March 1, with the final accord expected by the first of July. Iranian media also reported the extension of the talks through June.

"We have had to conclude it is not possible to get to an agreement by the deadline that was set for today and therefore we will extend the JPOA to June 30, 2015," British Foreign Secretary Philip Hammond said as Monday's session concluded.

Over the weekend, the Iranians rejected what the U.S. considered a generous offer: If Iran agreed to further curb its nuclear program, the U.S. would gradually suspend sanctions that have pummeled its economy. Iran wants all sanctions against it -- not just those imposed by the U.S. unilaterally, but also sanctions imposed by the United Nations and Europe -- lifted immediately.

So far, Tehran's negotiators have refused to give up some of the components which could be used to build a weapon. They claim their program is meant for civilian energy purposes.

Prospects for a broad political deal appeared farfetched. More likely, says Brennan, is simply an extension of the existing terms of the 2013 Joint Plan of Action, which requires Iran to freeze its nuclear program in exchange for limited sanctions relief. Such an extension would allow the highly complex negotiations to continue.

A Western official told CBS News over the weekend that, while not ideal, the terms of that prior deal have effectively rolled back Iran's ability to produce a weapon by putting its development program on hold.

In Tehran, where the economy has been crippled by years of harsh sanctions over the nuclear program, CBS News correspondent Elizabeth Palmer says a failure by the negotiators in Vienna would be extremely disappointing news for millions of ordinary Iranians.

Speaking to people at the main bazaar in Tehran on Sunday, Palmer said the sentiment was overwhelmingly in favor of a deal being reached with the West -- not just to ease the economic hardship, but because the majority of Iranians are eager to have more cordial relations with the rest of the world in general.

Also keen to see a deal struck -- even just for an extension of the talks -- were dozens of hopeful investors watching prices at the Tehran Stock Exchange on Monday morning. Palmer said the market was up 4 points on light trading as everyone stayed glued to the news.

If sanctions against Iran are eased, investors around the world are expected to pour millions in badly needed capital into the Iranian economy. Fear of violating sanctions -- even within the limited trade permitted under the current punitive measures -- has overwhelmingly blocked investment in the country for years.

But Iranians' support for a new deal with the West is not ubiquitous. Palmer said there were also loud protests in Tehran by hardliners over the weekend, who were not at all interested in closer relations with the West and who would actually be very happy to see the talks in Vienna collapse, so they can launch fresh political attacks against the man who began the process in earnest on Iran's behalf; moderate President Rouhani.

And there are fears that a mere extension of the talks could give skeptics of a broader deal in both countries more time to sabotage it, according to Trita Parsi of the National Iranian American Council.

"The landscapes in both countries are becoming increasingly aggressive, increasingly unforgiving of this negotiation process," Parsi told CBS News. "At some point it either has to succeed or it's going to become victim of domestic politics on both sides."

If Iran and the so called P5+1 (a negotiation group comprised of the U.S., Russia, China, France, Britain and Germany) don't find common ground by midnight (6 p.m. Eastern, Monday), Iran's nuclear program will be unfrozen and even more punishing sanctions triggered.

That's the worst case scenario, says Brennan, and it means both sides are racing around the clock to find compromises for a deal.