US President Donald Trump said he would decide on Friday over a potential deal with Iran to extend their ceasefire that would need to include opening the Strait of Hormuz and dismantling Tehran's capacity to make a nuclear weapon.
"I will be meeting now, in the Situation Room, to make a final determination," he said, referring to the White House's nerve centre for monitoring global crises.
Sources had said a deal was in the offing to extend a truce in place since early April for another 60 days to allow oil and gas shipments to resume through the strategic waterway while negotiators tackle tricky issues such as Iran's nuclear programme.
"Iran must agree that they will never have a Nuclear Weapon or Bomb. The Hormuz Strait must be immediately open, no tolls, for unrestricted shipping traffic, in both directions," Trump said, adding that nuclear material would be "unearthed" by the US.
A senior Iranian source told Reuters that a political understanding over the war had been reached but not yet finalised.
Iran's semi-official Fars news agency, citing sources, said there was a "mixture of truth and falsehood" in Trump's comments which were an, "attempt to portray a fabricated victory." After the US lifts its blockade on Iranian ships, the strait would be reopened but under Tehran's arrangements, Fars said.
There was no provision to destroy nuclear materials in the sides' memorandum of understanding, the agency said, though there was agreement to release $12 billion of Iran's frozen assets.
The war launched by the US and Israel on February 28 has killed thousands of people, mainly in Iran and Lebanon, and caused global economic pain by pushing up energy prices due to Iran's effective closure of the Strait of Hormuz.
Oil prices fell and stocks rose on Friday over the potential deal.
In his post on social media, Trump said mines would be removed from the strait and ships trapped there may start to go home: "Say HELLO to your wives, husbands, parents, and families from me, your favourite President!"
He added that no money would be exchanged, "until further notice," - a possible reference to Iran's demands for toll payments in the strait, war damage reparations or a release of Iranian funds frozen abroad.
Kazakhstan has signalled it is willing to take Tehran's stockpile of uranium enriched close to weapons-grade levels if the US reaches a deal with Iran, the head of the UN nuclear watchdog, Rafael Grossi, told the Financial Times.
Kazakhstan hosts an internationally controlled bank of low-enriched uranium to ensure fuel supplies for power stations in International Atomic Energy Agency member states.
In further diplomatic movement, the foreign minister of mediator Pakistan, Ishaq Dar, arrived in Washington on Friday for talks with US Secretary of State Marco Rubio. Iran also wants sanctions lifted, US forces withdrawn from the region, and for any peace deal also to end US ally Israel's offensive in Lebanon.
(Reporting by Reuters' bureaux; Writing by Andrew Cawthorne; Editing by Kevin Liffey and Sanjeev Miglani)