Iran says will go 'full offensive' if diplomacy with US fails as Trump threatens to bomb Oman

Iran will shift to a "fully offensive" military posture because efforts to negotiate a permanent end to its war with the US have stalled as Washington ruled out extending a temporary ceasefire agreement.

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 with attacks on Iran on 28 February.

"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," a senior Iranian official told Reuters news agency.

The official added that Iran 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 US were expected to reach a final peace agreement under a memorandum of understanding signed in June and aimed at ending the war.

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Signed on 17 June, the MoU set a 60-day timeframe for the US and Iran to reach a broader deal on Iran's nuclear program and US sanctions.

The agreement, which declared the "immediate and permanent termination of military operations on all fronts", quickly unravelled over a dispute about control of the Strait of Hormuz, the narrow waterway through which a fifth of global oil and liquefied natural gas flowed before the war.

Asked by reporters on Monday if the US was seeking to extend June's interim agreement, US President Donald Trump said no.

Iran said point 5 of the MoU gave it the right to manage the strait, which it shares with Oman, while the US rejected that interpretation. Hostilities resumed as Iran began firing on vessels it said were trying to sail through Hormuz on an unapproved route, and Trump said on 7 July that the pact was "over".

"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 Iran's deadline with the US and regional countries.

Iran has separately been negotiating an agreement with its neighbour Oman across the strait over managing Hormuz, seen as a key component of a wider deal, and says they are close to agreement, although progress has been slow.

Trump threatened to bomb Oman if it "gets in the way" of a US deal with Tehran on the Strait of Hormuz and called for Iran to surrender.

"If Oman gets in the way, we'll bomb the sh-t out of them," Trump told Fox News journalist Trey Yingst, referring to ongoing talks between Oman and Iran.