Mr. Khamenei told Air Force corps in Tehran on Thursday that the U.S. was acting in 'bad faith' in its offer. European Pressphoto Agency

Iran's Supreme Leader Ayatollah Ali Khamenei rejected a U.S. proposal for one-on-one talks, dimming hopes that the two countries would resume diplomatic relations soon.

Mr. Khamenei, who has the final decision on key state matters, was responding for the first time to an offer Vice President Joe Biden made last week to hold one-on-one talks with Iran whenever Mr. Khamenei was ready.

"The ball is in your court," Mr. Khamenei told air force personnel in a speech, according to a text of his speech on Iranian media, referring to the U.S. "Generally does speaking of negotiations while at the same time increasing threats and pressure have any real meaning?"

Washington tightened sanctions against Iran on Wednesday in an attempt to further limit the nation's ability to transfer its oil revenue from banks abroad. The new sanctions will force Iran to engage more deeply in costly oil-for-barter trade.

The U.S. and the European Union held out hope that ever-strict penalties against Iran's banks, oil sales and shipping would persuade it to negotiate over its nuclear program, which they allege is aimed at making weapons. Iran says its program is for civilian purposes, like energy. The sanctions are contributing to skyrocketing inflation, and Iran's currency, the rial, has fallen by more than 50% against the dollar in the past year.

After Mr. Khamenei's speech, State Department spokeswoman Victoria Nuland said the Obama administration hoped Iran would "engage on the substance" when it meets the five permanent members of the United Nations Security Council plus Germany for another round of nuclear talks on Feb. 26 in Almaty, Kazakhstan. "The burden of these sanctions could be eased if they made a decision to engage with us substantively," she said.

Senior Iranian officials have made contradictory public remarks in the past week over whether to talk directly to the U.S. Some Iranian officials had lobbied Mr. Khamenei to agree to parallel talks with the U.S. during the Kazakhstan meeting.

However, in his speech, Mr. Khamenei said those inside Iran who think Tehran should negotiate with the U.S. are "simple-minded." He addressed the sanctions by saying "you [U.S.] have said you want to paralyze our people with sanctions, is this a sign of good faith or bad faith?"

While the West focuses on halting or limiting Iran's enrichment of uranium, Iran is eager for a grand bargain that would lift the tough economic sanctions hurting its economy, guarantee it a stake in a post- Bashar al-Assad Syria, and address Tehran's fear that the U.S. and Israel will intervene militarily in Iran.

These goals, say former Iranian diplomats, could be achieved only through direct talks with Washington, which has led the sanctions efforts against Iran and can reverse them.

The Kazakhstan talks will happen against the backdrop of deepening internal divisions in Iran and presidential elections in June, which bode ill for any compromise. At the meetings, Iran will likely avoid making any firm commitments until Mr. Ahmadinejad's term in office expires, say analysts and former diplomats.

Analysts believe Mr. Khamenei will seek to deny Mr. Ahmadinejad credit for any breakthrough on nuclear negotiations before elections are held to replace the president.

Mr. Ahmadinejad angered Mr. Khamenei's camp this week by showing a videotape in a public session in Parliament that appeared to show brothers of a prominent Iranian family, the Larijanis—two of whom head Iran's judiciary and parliament—engaging in financial corruption.

In his address on Thursday, Mr. Khamenei barely addressed his public feud with Mr. Ahmadinejad, only saying that officials had demonstrated "bad behavior." He said he would speak to the public in more detail about the feud at a later date.

Write to Farnaz Fassihi at