Trump warns Iran of 'last chance' for peace deal and 'decapitation'

US President Donald Trump on Monday warned Iran had a "last chance" to sign a peace deal before "decapitation."

Speaking from the White House, Trump said Washington and Tehran had begun fresh negotiations despite Iran's Foreign Ministry having earlier denied talks were taking place.

"We're talking. And we're talking at the request of Iran, backed by Saudi Arabia, backed by UAE and backed by Qatar in particular," Trump told reporters in the Oval Office.

"This is a last chance for them to sign a good document," he added.

Pressed for further details, the president said the talks concerned the reopening of the Strait of Hormuz and limiting Iran's nuclear programme, two conditions for a deal that the US has repeatedly insisted upon.

"We're talking about the Strait, the opening of the Strait, having it open literally by tomorrow, completely open," he said.

"That's phase one. And phase two is we then will talk about the nuclear capacity," he continued, adding that the "denuclearisation of Iran has to happen."

The Strait of Hormuz has been a key sticking point in diplomatic efforts between the two sides over the last few months.

Tehran effectively closed the passage - which carries roughly a quarter of the global seaborne oil trade - after US and Israeli strikes on Iran in late February, throwing energy markets into chaos.

The US and Iran came to a tentative agreement aimed at ending the conflict and reopening the Strait in June, with the signing of a "memorandum of understanding," but retaliatory strikes soon started up again.

On Saturday, Trump announced that he had called off a large-scale planned attack on Iran at the request of Tehran and several Middle Eastern countries as the "perimeters of a deal" had been agreed.

The Iranian military reportedly rejected Trump's claim that Tehran had requested that the US stop the attack, calling it a "new lie" designed to "blackmail Persian Gulf rulers."

Esmail Baghaei, a spokesperson for the Iranian Foreign Ministry, said on Monday that there were "no negotiations" with the US but that talks with Oman were underway over allowing the safe passage of vessels through the Strait of Hormuz.