Dubai/Washington: Iran will shift to a "fully offensive" military posture because efforts to negotiate a permanent end to its war with the U.S. ​have stalled, a senior Iranian official told Reuters on Monday, ​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 U.S. and Israel launched with attacks on Iran on February 28.

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"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 U.S. naval blockade if diplomacy failed.

Monday marked the day by which Iran and the U.S. were expected to reach a final peace agreement ​under a memorandum of understanding signed in June and aimed at ending the war.

Signed on June 17, the MoU set a 60-day timeframe for the U.S. and Iran to reach ​a broader deal on Iran's nuclear programme and U.S. 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 U.S. was seeking to extend June's interim agreement, U.S. President Donald Trump said no.

TRUMP ⁠THREATENS TO ‌BOMB OMAN

Iran said point 5 of the MoU gave it the right to manage the strait, which it shares with Oman, while ​the U.S. 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 July 7 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 U.S. This is a precondition for ​further negotiations with the U.S.," the Iranian official told Reuters, adding that mediators would share Tehran's deadline with Washington and regional states.

Iran has separately been negotiating an agreement with its neighbor 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.

"If Oman gets in the way, we'll bomb the shit out of them," Trump told Fox.

HOUTHI ATTACKS STOKE CONCERNS OVER WIDER WAR

Thousands of people have been killed in the conflict, mainly in Iran and Lebanon, since the U.S. and Israel launched attacks on Iran at the end of February. Iran has bombed U.S. military bases ‌and infrastructure in countries including Oman, Jordan, Kuwait, Israel, the United Arab Emirates and Saudi Arabia.

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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, Trump repeated on his Truth Social platform that his main goal was to ensure that Iran never has nuclear weapons.

Benchmark Brent crude oil futures have surged since the start of the war in February, hitting a peak of $126 a barrel, roughly 75% above pre-war levels, with choppy ​trade reflecting concerns over disruptions to Gulf oil supplies and shifting signals on peace talks.

Brent crude edged up on Monday to around $89 a barrel.

Attacks by Iran-backed Houthis in Yemen have also renewed concerns about a widening regional war and the economic fallout it could bring.

In the latest incident, the Houthis attacked what they called a Saudi military ship and four escort vessels in the Bab el-Mandeb Strait with missiles, according to the group's military spokesperson Yahya Saree on Telegram on Monday. The strait is a strategic chokepoint connecting the Red Sea with the Gulf of Aden and an important international shipping route.

There was no immediate confirmation from Saudi authorities.