The United States launched a second round of airstrikes on Iran on Thursday morning after President Donald Trump warned that Tehran would "pay the price" for stalled negotiations, and Iran responded with strikes targeting Bahrain and Kuwait.

The new US assault across multiple Iranian cities came as efforts to negotiate an end to the war again appeared stuck, with Iran insisting it would maintain its chokehold on the Strait of Hormuz, which has disrupted global energy supplies and sent oil prices higher.

It was the third time this week that back-and-forth strikes have tested a two-month ceasefire.

Trump has urged Iran to sign a deal to end the war and suggested earlier this week that an agreement could be reached in days.

Iran's United Nations envoy said the US should refrain from threats of force if it wants a deal.

"Iran has never negotiated under threats and pressure and will never submit to pressure or question," Ambassador Amir Saeid Iravani told the UN Security Council on Wednesday.

Still, both countries seem to be looking for a way to end the conflict - if they can manage to sell it as a win-win.

Iran has proved resilient despite weeks of heavy bombing. It is betting that its ability to effectively close the Strait of Hormuz - a crucial passageway for oil and natural gas - gives it a strong bargaining chip.

Israeli Prime Minister Benjamin Netanyahu appears intent on pursuing goals that make compromise harder: the collapse of Iran's theocratic government, the elimination of its nuclear program, and the destruction of the Iranian-allied Hezbollah militant group in Lebanon. On Monday, Iran and Israel targeted each other.

The US strikes Iran, and Iran fires back at the Gulf States.

The US Central Command said it had "completed" its latest round of airstrikes just before sunrise in Iran. The military command said the strikes came "in response to Iran's unwarranted and continued aggression" and targeted "Iranian military surveillance capabilities, communication systems and air defence sites." It did not elaborate on the damage done by the strikes, which it said were carried out by the US Air Force, Marines and Navy.

Explosions from the strikes echoed around Iran's capital, Tehran, as well as the port city of Bandar Abbas and other southern areas along the Strait of Hormuz.

Iran responded by launching strikes on Bahrain and Kuwait, and Kuwait closed its airspace as its air defences fought off the attack. Kuwait's Directorate General of Civil Aviation said flights were being diverted to other airports, without elaborating.

"This measure comes in light of the state of Kuwait being subjected to sinful Iranian aggressions and the potential risks that may result from this on civil aviation traffic in the region," Kuwait said.

Kuwait International Airport took a direct Iranian hit in recent days, killing one person and wounding dozens. On Wednesday, Iran responded to US strikes with attacks on Bahrain, Kuwait and Jordan, all of which host US troops.

Israel early Thursday also warned residents in the north to seek shelter after the detection of suspected incoming fire from Lebanon.

Trump says the US is sneaking oil past the Strait of Hormuz

Since the US and Israel started the war with the Feb. 28 attacks on Iran, the conflict has shaken the global economy, driven up energy prices worldwide, and made food and other basics more expensive.

The international benchmark for crude oil traded above USD 93 a barrel on Wednesday, up more than 25 per cent since the start of the war.

Trump said the US military has, since last month, undertaken a "secret mission" to sneak oil shipments past Iran's forces in the Strait of Hormuz. He said ships were slipping through at night, aided by the destruction of Iranian radar equipment.

Trump said that as a result, more than 100 million barrels of oil have evaded Iran's chokehold on the strait. There was no immediate confirmation of that figure, which roughly equals five days of oil shipments through the waterway before the war began.

The military's role was not immediately clear. Capt. Tim Hawkins, a Central Command spokesman, said US forces "communicate and coordinate" with commercial ships in the area, but gave no details on military support being offered.

The US Central Command on Wednesday refuted Iran's claims that the Strait of Hormuz is closed, saying commercial ships are continuing to transit in and out.

US and Iranian strikes shake the Mideast

Earlier Wednesday, the US military said an American aircraft fired "precision munitions" into the engine room of the Palau-flagged vessel M/T Settebello as it attempted to breach the naval blockade with a shipment of Iranian oil. It was the eighth merchant vessel disabled by US forces in waters off Iran.

India's foreign ministry said three Indian sailors were missing after the Settebello was struck, while 21 others were rescued. Its statement did not mention the US military or the blockade.

Hawkins of the US Central Command said American forces warned the crew before firing on the ship.

The US military said strikes earlier Wednesday targeted "air defence, ground control stations, and surveillance radar sites."

Iran said US strikes hit two water reservoirs in the southern city of Sirik, temporarily cutting off water to thousands of people. US Central Command had no immediate comment. Tehran later claimed attacks in Kuwait, Bahrain and Jordan.

Iranian Foreign Minister Abbas Araghchi condemned the American attacks as a violation of Iranian sovereignty.

Still, efforts to mediate a deal continued. Following consultations with the US, a delegation from Qatar arrived in Tehran for talks earlier Wednesday, according to an official with knowledge of the visit who requested anonymity due to the sensitivity of the talks.

The exchanges of fire came a day after a US Army attack helicopter crashed near the Strait of Hormuz. The helicopter collided with an Iranian drone, according to a US official speaking on condition of anonymity to discuss an ongoing investigation. It wasn't clear whether the collision was intentional.

A drone boat rescued the helicopter's two crew. Trump said they were uninjured.

Big disagreements stand in the way of a quick peace deal

Wary of high gas prices in the run-up to congressional elections in November, Trump seems to be looking for a quick win. But he is also making demands that will be tough for Iran to swallow.

The US wants to see Iran give up its stockpile of highly enriched uranium. While Iran insists its nuclear program is peaceful, it is a short technical step from weapons-grade levels.

Iran is refusing to give up the uranium and demanding relief from sanctions. It also wants the release of frozen assets even before a final agreement is in place, something Trump rejected.

Iran has insisted that any deal to end the war must also end fighting between its ally Hezbollah and Israel. Israel has instead intensified its military campaign against the Lebanon-based militant group.