President Donald Trump said on Wednesday the US and Iran still have issues to resolve in peace talks, after Washington dismissed an Iranian state television report of a framework deal to restore shipping through the Strait of Hormuz within a month and to lift a US naval blockade on Iranian ships.
Trump told a cabinet meeting that Iran remained keen to end the war, which has choked global energy supplies through the strategic waterway, but that the terms did not satisfy Washington.
"Iran is very much intent, they want very much to make a deal. So far they haven't gotten there...We're not satisfied with it, but we will be. Either that or we'll have to just finish the job," he said, without elaborating.
"The deal has got to be perfect," he later added, insisting that the Strait of Hormuz would be open immediately after a deal is reached and that no single country would have control over the waterway.
Iranian state TV reported that it had obtained an unofficial draft of a memorandum of understanding under which the US would lift its blockade and withdraw its forces from Iran's vicinity.
It said the issue of US troops in the region needed further discussion, without elaborating. It did not mention Iran's nuclear programme, which the US wants disbanded.
In a statement on social media, the White House dismissed the report as a "complete fabrication", while Tehran did not comment. Publicly, the two sides previously have outlined positions starkly at odds.
US Secretary of State Marco Rubio told the cabinet meeting: "There's been some progress and some interest, and we'll see over the next few hours and days whether progress could be made."
"The bottom line is Iran's never going to have a nuclear weapon," he added.
Key sticking points in the talks have included reopening and management of the Strait of Hormuz waterway, through which a fifth of the world's oil and liquefied natural gas flowed before the conflict, and the issue of the dismantling of Iran's nuclear capacity.
Trump said that once a deal is struck, the US would monitor shipping there. He also said that Oman, on the southern shores of the strait, would have to play its part in the process as well. The strait is covered by international law that guarantees foreign vessels the right to pass through.
"We'll watch over it, but nobody's going to control it - that's part of the negotiation that we have...," he said.
Oil prices fell more than five per cent after the Iranian television report, before retracing about a fifth of that fall.
The US military has some 15,000 troops enforcing a blockade of Iran and has thousands of additional forces at bases throughout the region, including in Persian Gulf states like Qatar, the United Arab Emirates and Bahrain.
US naval vessels, some with thousands of sailors and Marines aboard, regularly transit the region, stopping in ports including in Oman. The Pentagon did not immediately respond to a request for comment.
Iranian sources have said talks on the nuclear issue will come in a second round of negotiations - something that may not be acceptable to some of Trump's closest supporters. Iran says its nuclear programme is for peaceful purposes only.
Earlier on Wednesday, a senior Iranian official told reporters on the sidelines of the first International Security Forum in Moscow that reopening the Strait of Hormuz remained a sticking point.
“As long as we have not agreed on all issues, we consider that nothing has been agreed,” Iran’s deputy secretary of the Supreme National Security Council, Ali Bagheri Kani, told reporters when asked about a deal on reopening the waterway.
Iran's Islamic Revolutionary Guards Navy said on Wednesday that 23 ships including oil tankers, container ships and other commercial vessels passed through Hormuz with its permission in the previous 24 hours, a fraction of the daily 125 to 140 vessels passing through before the conflict.
(Reporting by Reuters' bureaux; Writing by Sharon Singleton and Hugh Lawson; Editing by Andrew Cawthorne and Cynthia Osterman)