Trump says 'good chance' of progress in Iran talks as foes hold fire

US President Donald Trump on Monday expressed optimism about the prospects for a negotiated peace deal with Iran as the two sides observed a third consecutive day without exchanging fire.

Fighting between the long-time rivals has remained paused since Friday after 13 nights of renewed US strikes on Iran, triggered by the collapse of diplomacy over Tehran's blockade of the Strait of Hormuz.

Trump said renewed diplomatic efforts could help end the conflict, which began in late February with a wave of US-Israeli strikes that rattled the region and the global economy.

"I have a lot of patience... We'll see what happens," he told reporters aboard Air Force One. "I think there is a good chance that something could happen."

Earlier, Iran denied that any negotiations with the United States were underway.

"Mediators may convey messages from the American side to us regarding current developments in the region. But at present, we are not engaged in any negotiations with the United States," Iranian Foreign Ministry spokesman Esmaeil Baghaei said.

However, speaking later in Michigan, Trump insisted that "right now, they're talking to us about making a deal".

Earlier aboard Air Force One, he warned that if the latest diplomatic efforts failed, "we go back to doing what we were doing" before the pause in hostilities.

Trump also dismissed concerns that US ammunition stockpiles were running low nearly five months into the conflict.

"We have a lot of ammunition. We have a lot of the mid-level stuff too, more than we could ever use no matter what," he said.

Saudi Arabia attacked

Despite the recent lull, Saudi Arabia came under attack on Monday, with its Defence Ministry saying it had intercepted several drones launched by Iran-linked groups in Iraq that targeted oil facilities.

No group claimed responsibility, but Riyadh urged Baghdad to prevent such attacks from being launched from Iraqi territory.

Iraqi Prime Minister Ali al-Zaidi later called for an investigation into Saudi Arabia's allegations.

Pakistan, which has been mediating efforts to resolve the Middle East conflict, condemned the drone attacks, saying they "pose a grave threat to peace and stability" in the region.

Yemen's Iran-backed Houthi rebels also claimed responsibility for drone attacks on Saudi oil infrastructure, saying they were carried out in response to incursions by Saudi drones. Riyadh has yet to comment on the claim.

Saudi Arabia and other Gulf states had earlier accused pro-Iran militias in Iraq of launching waves of attacks during the conflict, although the groups have not claimed responsibility for any strikes since the latest hostilities resumed.

Elsewhere, the Israeli military said it had intercepted two drones near the Jordanian border and was investigating their origin.

Global stock markets rallied on Monday while oil prices fell sharply following the continued pause in hostilities between Washington and Tehran.

The respite also eased pressure on Gulf shipping and the energy sector, with international benchmark Brent crude dropping about 6% to around $86 a barrel.

Strait of Hormuz remains sticking point

Control of the Strait of Hormuz remains a major obstacle to a lasting settlement, with Iran insisting it should continue to manage the strategically important waterway.

Iran's Islamic Revolutionary Guard Corps has recently stopped several vessels attempting to transit the route, including six ships that state television said on Monday had sailed outside Iran's designated channel.

Tehran said it has held talks with Oman, which also borders the strait, on "common principles and operational mechanisms" to ensure the safe passage of shipping.

In June, Oman and Iran said they would discuss imposing service fees for vessels using the waterway, a proposal opposed by Washington.

Relations were further strained after Oman suggested that ships could transit the Strait of Hormuz through its territorial waters, prompting Iran to attack vessels, according to Tehran.

Baghaei said the United States was not involved in the recent discussions with Oman.

He also criticised Washington, saying its conduct in recent years had "resembled that of a mafia gang that adheres to no rules or laws".