Iran threatens to escalate conflict if Hormuz shipping deal not reached

Iran has decided to shift its policy from defensive to "fully offensive" due to the deadlock in efforts to agree a permanent end to its war with the United States, a senior Iranian official tells Reuters.

It came as US President Donald Trump threatened to expand the war, telling US cable news he would be prepared to "bomb the s*** out of" Oman if it "gets in the way" of the US's aims for the waterway.

Iranian and Omani officials have been talking for weeks on future maritime navigation arrangements through the Strait of Hormuz, which Mr Trump has floated as a future US territory.

Progress towards peace talks and a resumption of oil tanker traffic through the strategic Strait of Hormuz has ground to a halt, with no sign that the warring parties are moving towards ending the conflict that the US and Israel launched on February 28.

"Iranian entities must be prepared to escalate tensions in the Strait of Hormuz and wider region, as Iran will be ready to make decisions and take action on difficult decisions," the Iranian official said, adding that Tehran would conduct a "timely and precise" military attack to break the US naval blockade if diplomacy failed.

Monday marked the day by which Iran and the United States were expected to reach a final deal under a memorandum of understanding agreed in June and aimed at ending the war.

Signed on June 17, the MoU set out a 60-day time-frame, extendable by mutual consent, by which Washington and Tehran should reach an agreement that would cover broader issues such as the fate of Iran's nuclear programme.

The MoU, which declared the immediate and permanent cessation of military operations on all fronts, quickly unravelled, however, due to a dispute over control of the Strait of Hormuz.

Iran to set deadline

Tehran said point five of the MoU gives it the right to manage the waterway, while Washington rejected that interpretation.

Hostilities resumed as Tehran began firing on vessels it said were trying to sail through the waterway on an unapproved route.

US President Donald Trump said on July 7 that the pact was "over". Tehran has repeatedly accused Washington of consistently violating its commitments.

"Within the short period of a few weeks set by Iran, all the agreement's provisions must be implemented by the US. This is a precondition for further negotiations with the US," the Iranian official told Reuters, adding that mediators would share Tehran's deadline with Washington and regional states.

Both Iran and the United States have stepped up rhetoric over the past week.

Mr Trump warned Americans in a speech at a rally on Friday to prepare for continued high fuel prices as a result of the war, while also saying that "after we finish defeating Iran … pretty soon I'll be declaring the Hormuz Strait a territory of the United States".

Earlier on Monday, Mr Trump posted on his Truth Social platform: "The number one Goal is, and always will be, that Iran cannot have, in any way, shape, or form, a Nuclear Weapon", repeating one of his stated rationales for the war.

Trump threatens to 'bomb the s***' out of Oman

Mr Trump also issued a threat that he was prepared to bomb Oman, which lies to the south of the Strait of Hormuz. 

"If Oman gets in the way, we'll bomb the shit out of them," Mr Trump told Fox News journalist Trey Yingst, referring to ongoing talks between Oman and Iran on control of the strait, while Washington is also pursuing its own talks.

Iranian and Omani officials have been talking for weeks on future maritime navigation arrangements through the shipping route, and the foreign ministry in Tehran said earlier Monday that the two sides were working on a joint declaration.

Iran's coast flanks the north side of Hormuz and Oman lies on the south.