Iran has warned it may extend an oil embargo imposed on Britain and France to other European countries, and launched a military exercise to strengthen key nuclear sites against air strikes as a team of UN inspectors arrived in the country.

Herman Nackaerts, the leader of the five-member UN team, said he wanted concrete results from the two-day visit, the second within a month. But, amid scepticism that inspectors would be permitted access to nuclear facilities, Nackaerts added that progress "may take a while".

The team is hoping to question Iranian nuclear scientists and visit the Parchin military base, where high-explosive tests are thought to have been conducted. But Ali Akbar Salehi, Iran's foreign minister, told a student news agency that the officials would not be inspecting any sites.

In a sign of mounting tensions in the region, Iran began a four-day military exercise in the south of the country to "practise co-ordination between the Revolutionary Guards and regular army and air defence units in establishing a defence umbrella over our vital centres, particularly nuclear facilities", according to a military statement quoted by an Iranian news agency.

Missiles, anti-aircraft artillery, radars and warplanes were being deployed, it said.

At the same time, Iran's deputy oil minister warned that the decision to halt supplies to Britain and France, announced at the weekend, could be applied to other European countries. "Undoubtedly, if the hostile actions of certain European countries continue, oil exports to these countries will be stopped," Ahmad Qalebani told state TV.

The threat to extend the embargo defied China's disapproval of Iran's measure. "We have consistently upheld dialogue and negotiation as the way to resolve disputes between countries, and do not approve of exerting pressure or using confrontation to resolve issues," the Chinese foreign ministry spokesman Hong Lei said in response to the ban on oil sales to British and French firms.

The Iranian move was prompted by anger at a European Union decision to stop buying oil from the Islamic Republic from 1 July as part of a programme of toughened sanctions. The European commission said on Monday that Belgium, the Czech Republic and the Netherlands had already stopped buying Iranian oil, while Greece, Spain and Italy were cutting back on purchases.

However, Qalebani insisted that demand for Iranian crude oil had increased.

In Jerusalem, Israel's deputy prime minister, Dan Meridor, said Iran's actions in recent weeks indicated that sanctions were beginning to have an effect. "The hysteria we see in Iran is a good indication, a symptom of what this regime is going through ... All this shows the pressure which this regime is under, but they have not yet decided to shut down their nuclear effort, so the struggle is on," he told the foreign press. "I think there is a chance of success [for sanctions] if they are done with determination, persistence and leadership."

Meridor, who is known to be more cautious than Israel's prime minister and defence minister on the issue of a military strike, repeatedly emphasised that sanctions should be given the chance to work. But, despite the international "community of interests", he said it was possible that Israel would have to stand alone to halt the suspected Iranian nuclear programme.

However, a report in the New York Times suggested that the Israeli military would face a "huge and highly complex operation" to hit Iranian nuclear targets. The report quoted US defence officials and military analysts, who questioned whether Israel had the military capability for such an operation; some voiced concern that the US could be sucked into finishing the job.

Israel would need to deploy at least 100 planes, flying a round trip of more than 2,000 miles, requiring mid-air refuelling and likely to come under anti-aircraft fire.

"Another major hurdle is Israel's inventory of bombs capable of penetrating the Natanz facility, believed to be buried under 30ft of reinforced concrete, and the Fordo site, which is built into a mountain," said the report. It was not clear if Israel's arsenal of US-made "bunker buster" bombs could penetrate deep enough.

The US has urged Israel to hold back from military action, fearing a strike could embroil the region in a spiralling war. Barack Obama's national security adviser, Tom Donilon, met Israel's defence minister, Ehud Barak, in Jerusalem on Monday to reinforce the message of restraint.

President Obama is to meet Binyamin Netanyahu at the White House on 5 March, when the Israeli prime minister visits Washington for the annual conference of the pro-Israel lobby group, Aipac. Iran will top the agenda of the two leaders' talks.