The presumptive Democratic presidential nominee told a news conference in Sderot after meetings in Jerusalem with Israeli leaders and in the West Bank with Palestinian officials such a scenario "is our single most important threat, both to Israel and also to the United States."
Obama said he takes it as a positive sign the Bush administration shifted its Iran position slightly by sending a representative to last weekend's talks on Iran's nuclear program.
Obama said he still would be willing to sit down with Iranian President Mahmoud Ahmadinejad "if I thought it would promote the national security interests."
"My whole goal, in terms of having tough, serious direct diplomacy, is not because I'm naive about the nature of any of these regimes. I'm not," Obama said. "It is because if we show ourselves willing to talk and to offer carrots and sticks in order to deal with these pressing problems, and if Iran then rejects any overtures of that sort, it puts us in a stronger position to mobilize the international community to ratchet up the pressure on Iran.
"Our unwillingness to talk or the perception that we are trying to bully our way through negotiations -- that's eliminated as an excuse for them not dealing with these issues in an appropriate way."