The correct answer is Option B.
'Than ' is used when comparison between two things is made, for e.g. he is taller than his brother.
'Or' is used when we are to choose between two things, for e.g. I will study History or English.
Hence Option A and C are not the suitable options that correct the sentence at the underlined point.
As a rule the adverb ELSE is followed by BUT. The sentence means to say that what prevented him from speaking is embarrassment.
Therefore option B is the correct option.