Iran says no final decision made on deal

President Donald Trump has announced on Thursday that the US and Iran could sign a peace deal as soon as this weekend that would reopen the Strait of Hormuz to shipping, but Iran countered that it had not reached a final decision on an agreement.

The deal, if confirmed, would be the most significant diplomatic breakthrough yet to end the three-month-old war, which has killed thousands and sent global energy prices sharply higher.

Iranian media reported Foreign Ministry spokesperson Esmaeil Baghaei as saying that large parts of the text under negotiation have been finalised but Iran would not compromise on its red lines.

"We have not reached a final conclusion on this matter," he said. "This is a very important issue that is currently being reviewed by the relevant decision-making bodies."

Trump, meanwhile, told reporters at the White House: "We just made a great settlement of the war with Iran."

US forces shot down two Iranian one-way attack drones as Tehran appeared to attempt to strike commercial ships transiting the Strait of Hormuz, a US official told Reuters on Thursday, in the latest clashes between the two nations.

"Traffic flow through the strait continues," the official said, speaking on condition of anonymity.

"The Strait will officially open as soon as we sign, which could be soon, very soon, maybe over the weekend in Europe," Trump said, adding Vice President JD Vance could sign for the United States.

When asked if Iran's Supreme Leader Ayatollah Mojtaba Khamenei approved the deal, Trump said: "I understand the answer is yes."

Trump's announcement came after he called off planned military strikes on Iran, citing progress in talks. US stocks rose and oil prices fell on the news.

Since mid-March, Trump has repeatedly claimed that a deal with Iran to end the war was close. The two sides have traded strikes this week, straining a ceasefire announced in April.

"It's a very strong memorandum of understanding that is a little conceptual," Trump told reporters.

Trump has repeatedly said that any peace deal must ensure Iran cannot develop a nuclear weapon. Iran denies it is seeking such a weapon.

Iran's demands include the lifting of international sanctions, the release of billions of dollars in frozen assets and recognition of its control of the Strait of Hormuz.

"The big thing is there will be no nuclear weapons in Iran. That means not developed and not purchased," Trump later said during a campaign event held by telephone.