President Donald Trump has threatened Iran with "obliteration" if it strikes "anything American" after Tehran dismissed new US sanctions as "useless".
In what's becoming a war of words, Iran responded to the fresh sanctions by calling the White House 'mentally retarded'.
"Any attack by Iran ... will be met with great and overwhelming force," Trump tweeted. "In some areas, overwhelming will mean obliteration."
But the US President has left the door opens for talks.
“Their country is not doing well economically at all. That could be changed very quickly, very easily,” Trump said. “But they have to get rid of the hostility from the leadership. The leadership – I hope they stay, I hope they do a great job - but they should talk to us peaceably.”
On Monday, Trump signed an executive order ordering additional sanctions against Iran's Supreme Leader Ayatollah Ali Khamenei, Foreign minister Javad Zarif, and eight Revolutionary Guard commanders.
Tensions started on both sides after an attack earlier this month on two oil tankers in the Strait of Hormuz, which US officials blame on Iran — which denies involvement. Words then escalated between the two countries after Tehran shot down a US drone last week, saying it was in its air space, but Washington alleges it was flying over international waters.
In a televised address on Tuesday, Iran's President, Hassan Rouhani, said the White House's actions were “mentally retarded” and said the sanctions against Khamenei would not have much of an impact as he has no assets abroad.
Iran under pressure
The US slapped sanctions on Iran last year following the White House withdrawal from a 2015 deal between Tehran and other world powers in return for Iran containing its nuclear program.
Iran's economy has been under further pressure after the US ordered all countries to stop buying Iranian oil last month.
Oil is the country's main source of revenue which is used to import food for its population of 81 million people.
Trump nor Tehran are looking for war
Trump said Sunday he was not seeking war with Tehran. The remark came after a senior Iranian military commander warned any conflict in the Gulf region could spread uncontrollably and threaten the lives of US troops.
"I'm not looking for war," Trump told NBC's Meet the Press program on Sunday.
US Secretary of State Mike Pompeo repeated to reporters on Sunday that Washington was prepared to negotiate with Tehran with no preconditions.
Tehran, meanwhile, said ahead of the sanctions announcement on Monday that it could be willing to discuss new concessions with Washington if the US lifted current sanctions and offered new incentives.
However, Foreign Ministry spokesman Abbas Mousavi said imposing the new “useless sanctions” would mark “the permanent closure of the path of diplomacy.”
Trump tweeted Saturday "Iran cannot have Nuclear Weapons" when he announced new sanctions would be added.
"Regardless of any decision they (U.S. officials) make... we will not allow any of Iran's borders to be violated. Iran will firmly confront any aggression or threat by America," Foreign Ministry spokesman Abbas Mousavi told the semi-official Tasnim news agency on Saturday.
Fears of an 'accidental war'
World powers have called for calm and sent in envoys for talks to try to ease a dispute that has pushed up the price of oil.
British Foreign Secretary Jeremy Hunt said on Monday: “We are very concerned. We don’t think either side wants a war, but we are very concerned that we could get into an accidental war and we are doing everything we can to ratchet things down.”
German Chancellor Angela Merkel called on Saturday for a political resolution of the crisis, adding: "That is what we are working on."
Iran has threatened to breach the deal if the European signatories to the agreement fail to salvage it by shielding Tehran from US sanctions.
"The Europeans will not be given more time beyond July 8 to save the deal," Mousavi said, referring to Iran's deadline of 60 days that Tehran announced in May.