The US military began a blockade of Iran's ports, angering Tehran and adding uncertainty around the crucial waterway, although hopes for dialogue to end the war provided some relief to oil markets where benchmark prices fell below $100 on Tuesday.
After a breakdown of weekend talks in Islamabad between the two adversaries, a US official said there was continued engagement and forward motion on trying to get to an agreement. Pakistani Prime Minister Shehbaz Sharif also said efforts were still underway to resolve the conflict.
US President Donald Trump said Iran had been in touch on Monday and wanted to make a deal but that he would not sanction any agreement allowing Tehran to have a nuclear weapon.
Since the United States and Israel began the war on February 28, Iran effectively shut the Strait of Hormuz to all vessels except its own, saying passage would be permitted only under Iranian control and subject to a fee. The fallout has been widespread, since nearly a fifth of the world's oil and gas supplies flowed through the narrow waterway before the start of the conflict.
Trump has said Washington would block Iranian vessels and any ships that paid such tolls and that any Iranian "fast-attack" ships that went near the blockade would be eliminated. Tehran has threatened to hit naval ships going through the strait and to retaliate against its Gulf neighbours' ports.
Shipping data on LSEG showed Chinese-owned oil-and-chemicals tanker Rich Starry passed through the strait on Tuesday - the first since the U.S. blockade began at 10 a.m. EDT (1400 GMT) on Monday. The vessel, which departed Sharjah anchorage off the coast of Dubai on Monday heading for China, had earlier turned back minutes after approaching the strait.
The US's blockade has further clouded the outlook for global energy security and the supply of a vast array of goods that relies on petroleum, and has little, if any, international backing.
NATO allies including Britain and France said they would not be drawn into the conflict by taking part in the blockade, stressing instead the need to reopen the waterway.
Despite the breakdown of talks between the U.S. and Iran on Sunday, Vice President JD Vance, who led the U.S. delegation, told Fox News on Monday the U.S. "made a lot of progress" by communicating to Tehran where the U.S. "could make some accommodation" and where it would remain inflexible.
He said Trump was adamant that any enriched nuclear material must be removed from Iran and a mechanism must be established to verify that Iran is not developing nuclear weapons.
Tehran "moved in our direction, which is why I think we would say that we had some good signs, but they didn't move far enough," Vance said, without disclosing details.
The ceasefire that halted six weeks of US-Israeli airstrikes and retaliatory fire from Iran across the Gulf looked in jeopardy, with only a week left to run.
The US military's Central Command said the blockade would be "enforced impartially against vessels of all nations" entering or leaving Iranian ports in the Gulf and Gulf of Oman. It would not impede neutral transit passage through the Strait of Hormuz to or from non-Iranian destinations, it said in a note to seafarers seen by Reuters.
An Iranian military spokesperson called any US restrictions on international shipping "piracy," warning that if Iranian ports were threatened, no port in the Gulf or Gulf of Oman would be secure. Any military vessels approaching the strait would violate the ceasefire, Iran's Revolutionary Guards said.
Trump said Iran's navy had been "completely obliterated" during the war, adding that only a small number of "fast-attack ships" remained.
"Warning: If any of these ships come anywhere close to our BLOCKADE, they will be immediately ELIMINATED, using the same system of kill that we use against the drug dealers on boats at Sea. It is quick and brutal," Trump said on social media.
He was apparently referring to the U.S. strikes carried out against suspected drug boats in the Caribbean and Pacific. The strikes, which began in September, killed more than 160 people. The U.S. military has not provided evidence that the vessels were ferrying drugs.
With the war unpopular at home and rising energy prices causing political blowback, Trump paused the U.S.-Israeli bombing campaign last week after threatening to destroy Iran's "whole civilisation" unless it reopened the strait.
In a letter to the United Nations, Iran's U.N. delegation on Monday asked for reparations from Saudi Arabia, the UAE, Bahrain, Qatar and Jordan, alleging they have allowed their territory to be used in the U.S.-Israeli war against Iran.
Israel has continued to bombard Lebanon and on Monday troops launched an attack it said was intended to seize a key south Lebanon town from Iran-backed Hezbollah. Israeli military said on Tuesday that an Israeli soldier was killed and three reservists were wounded during combat in southern Lebanon.
Israel and the US have said the campaign against Hezbollah was not part of the ceasefire, while Iran has insisted it is.
