US President Donald Trump has announced that he will pause attacks on Iran's energy plants for ten days at Tehran's request and said talks with Iran were going "very well".
However an Iranian official has dismissed a US proposal for ending the conflict as "one-sided and unfair".
The war has killed thousands of people, spread to neighbouring nations and hit the global economy with soaring energy prices since the United States and Israel launched strikes on 28 February, after talks about Tehran's nuclear program failed to yield a deal.
Mr Trump threatened during a cabinet meeting at the White House to increase pressure on Iran if it did not make a deal, before later posting on social media that he would pause attacks on Iranian energy plants for ten days until 6 April.
"Talks are ongoing and, despite erroneous statements to the contrary by the Fake News Media, and others, they are going very well," he added in his Truth Social post.
He later told Fox News' "The Five" program that the Iranians had asked for a seven-day pause. There was no immediate reaction from Tehran.
Iran has not asked for a ten-day pause on strikes on its energy plants, the Wall Street Journal cited peace talk mediators as saying.
Watch: Trump says US will be Iran's 'worst nightmare' if Tehran does not make a deal
Drone speedboats
The war has massively disrupted shipping, sending crude oil prices up around 40% and causing a spike of some two-thirds in shipments of liquefied natural gas to Asia.
Prices of nitrogen-based fertilisers, critical to food production, have risen by around 50%.
Despite Mr Trump's upbeat assessment, Iran continued to retaliate against US and Israeli strikes by hitting Israel and US bases. It also struck Gulf states and effectively blocked Middle East fuel exports via the Strait of Hormuz.
The United States has deployed uncrewed drone speedboats for patrols as part of its operations against Iran, the Pentagon told Reuters, the first time Washington has confirmed using such vessels in an active conflict.
Mr Trump said the US would become the Islamic Republic's "worst nightmare" if it did not comply with US demands, which include opening the strait and ending Tehran's nuclear program.
He said taking control of Iran's oil was an option, but gave no details.
The Iranian official told Reuters that a 15-point US proposal, conveyed to Tehran by Pakistan, was reviewed in detail yesterday by senior Iranian officials and the representative of Iran's supreme leader.
While they felt it served only US and Israeli interests, diplomacy had not ended, the official said.
The fighting continued to rage, however.
Iran today launched multiple waves of missiles at Israel, striking Tel Aviv, Haifa and other areas, including a Palestinian town in central Israel.
At least one ballistic missile hit Tel Aviv, according to Israel's military, while others carried cluster munitions that dispersed smaller explosives, damaging homes and cars.
Israel's ambulance service said a man was killed in Nahariya after Hezbollah fired a rocket barrage at the northern city.
In Iran, strikes hit the southern city of Bandar Abbas and a village on the outskirts of the southern city of Shiraz. A university building in Isfahan was reported to have been hit.
Strait of Hormuz a crucial issue
Mr Trump has suggested that Iran let ten oil tankers transit the Strait of Hormuz as a goodwill gesture in negotiations, including some Pakistan-flagged vessels.
The president has sent thousands of troops to the Middle East, some of whom have already arrived, driving expectations of a ground invasion, although details remain scant.
Mr Trump's special envoy, Steve Witkoff, confirmed that the US had sent a "15-point action list" as a basis for negotiations to end the war.
It includes demands ranging from dismantling Iran's nuclear program to curbing its missiles and effectively handing over control of the strait, according to sources and reports.
Pakistan's foreign minister said "indirect talks" between the US and Iran were taking place through messages relayed by Islamabad, with other states including Turkey and Egypt also supporting mediation efforts.
Any talks look set to be extremely thorny.
Iran has hardened its stance since the war began, demanding guarantees against future military action, compensation for losses, and formal control of the strait, Iranian sources say.
It also told intermediaries that Lebanon must be included in any ceasefire deal, regional sources said.
Mr Trump has not identified with whom the US is negotiating in Iran, with many high-ranking officials among the thousands of people killed in the war across the Middle East.
With the Strait of Hormuz, a conduit for a fifth of the world's oil and liquefied natural gas, effectively closed, the impact is rippling through sectors from plastics and airlines to technology, retail and tourism.
Some governments are weighing support measures last used during the Covid pandemic.
Farmers are struggling to source diesel for their tractors and tens of millions more people will face acute hunger if the war continues into June, the World Food Programme estimates.
Sultan Al Jaber, the CEO of Abu Dhabi state oil company ADNOC, accused Iran of "economic terrorism".
"No country can be allowed to destabilise the global economy in this way. Not now. Not ever," Al Jaber said in a speech in the US yesterday.
