US President Donald Trump on Saturday pledged to hit Iran with "major" new sanctions as Tehran warned Washington that any attack would see its interests across the Middle East go up in flames.
The war of words heated up after Trump had pulled back from military action against Iran in response to its downing of a US reconnaissance drone.
That incident, which came after a series of attacks on tankers in the congested shipping lanes out of the Gulf that the US has blamed on Iran, exacerbated already tense relations between the two countries.
Iran has denied responsibility for those attacks.
After the drone was downed, Trump secretly authorised US Cyber Command to carry out a retaliatory cyber attack on Iran, The Washington Post reported Saturday.
It crippled computers used to control rocket and missile launches, according to the Post, while Yahoo News said a spying group responsible for tracking ships in the Gulf was targeted.
'Let's make Iran great again'
Earlier, before heading to Camp David for meetings with his advisors on the situation, Mr Trump said he would be Iran's "best friend" and that the Islamic republic could be a "wealthy" country if it renounced nuclear weapons.
"We're not going to have Iran have a nuclear weapon," Mr Trump told reporters outside the White House.
"When they agree to that, they're going to have a wealthy country. They're going to be so happy, and I'm going to be their best friend. I hope that happens."
"Let's make Iran great again," he added, tweaking for the occasion his main domestic political mantra.
Added Secretary of State Mike Pompeo: "When the Iranian regime decides to forgo violence and meet our diplomacy with diplomacy, it knows how to reach us. Until then, our diplomatic isolation and economic pressure campaign against the regime will intensify."
But lest anyone think he was entirely ruling out military action, Trump tweeted Saturday evening that "I never called the strike against Iran 'BACK,' as people are incorrectly reporting, I just stopped it from going forward at this time!"
Last year, Trump withdrew the United States from the deal designed to curb Iran's nuclear ambitions in exchange for sanctions relief, and reinstated measures designed to choke off Iranian oil sales and cripple its economy.
As part of the spike in tensions, the US has beefed up its military presence in the Middle East and blamed Iran for attacks on oil tankers on the Gulf of Oman. Iran denies any responsibility.
"Everyone was saying I'm a war-monger, and now they say I'm a dove," Trump said Saturday as he was peppered with questions about the Iran drama.
"I think I am neither, if you want to know the truth. I'm a man with common sense, and that's what we need in this country, is common sense."
Trump insisted it is up to the Iranian leadership how the current crisis plays out.
"If the leadership of Iran behaves badly, then it's going to be a very, very bad day for them," he said.
"But hopefully they're smart and hopefully they really care for their people and not themselves, and hopefully we can get Iran back on to an economic track that's fantastic, where they're a really wealthy nation, which would be a wonderful thing," he added.
