President Donald Trump warned Tehran on Wednesday that it should "get smart soon" and capitulate to Washington's demands for tight controls on its nuclear programme, as a US naval blockade turned the screws on Iran's economy.
Pentagon chief Pete Hegseth was due to testify before Congress later in the day, but US press reports suggested Trump has already decided to reject Iran's latest proposed deal to reopen the Strait of Hormuz.
The news sent oil prices higher once again. At around 1335 GMT, a barrel of Brent crude for June delivery was up 5.16 per cent at $117, its highest level since the fragile ceasefire between the United States and Iran came into effect on April 8.
According to the Wall Street Journal, Trump intends to pursue the blockade of Iranian ports until Tehran is forced to dismantle its nuclear programme.
"Iran can't get their act together... They better get smart soon," Trump posted on his social media platform.
Iran has blockaded the strait - a vital conduit for oil and gas shipments from the Gulf - since the US and Israel launched the war two months ago, sending shockwaves through the global economy. But its own economy is also suffering.
On Wednesday, the Iranian rial fell to historic lows against the dollar, while Tehran residents speaking to journalists in Paris reported a sense of despair.
"Every time in recent years that negotiations have taken place, the economic situation of the people has only gotten worse. Sanctions have either started or intensified," a 52-year-old architect said, speaking on condition of anonymity.
"They go to negotiate and come back with even more sanctions, and the issue is always nuclear. There's no talk about people, the economy, or freedom. People have the right to not even want to hear the word 'negotiation'," he said.
During a White House state dinner on Tuesday, Trump told Britain's King Charles III and other guests that Iran has been "militarily defeated", and added: "Charles agrees with me even more than I do -- we're never going to let that opponent have a nuclear weapon."
But an Iranian army spokesman told state TV on Tuesday that "we do not consider the war to be over", saying Tehran had "no trust in America".
"We have many cards that we have not yet used... new tools and methods of fighting based on the experiences of the past two wars, which will definitely allow us to respond to the enemy more decisively" should the fighting resume, Amir Akraminia said in an interview.
Efforts to end the war have stalled in recent days. The latest Iranian proposal, passed along by Pakistan and studied by Trump administration officials in a meeting on Monday, laid out red lines including on nuclear issues and Hormuz, according to Iran's Fars news agency. - AFP
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