Iran will immediately reciprocate if the U.S. returns to its commitments under an interim deal signed in June, President Masoud Pezeshkian said on Tuesday at the Shanghai Cooperation Organisation Summit (SCO) in Bishkek, a city in Kyrgyzstan, the Iranian Student News Agency reported.
He made the comment after U.S. President Donald Trump threatened further strikes against Iran after Washington and Tehran exchanged direct attacks for the first time in weeks on Monday, raising fears that the conflict could move beyond economic pressure and back into military escalation.
Iran said it launched missiles at two U.S. air bases in Jordan in retaliation for a U.S. strike on Iran’s Larak Island near the Strait of Hormuz. Washington said the earlier strike targeted Iranian launchers it accused of preparing to deploy sea mines in the strategic waterway.
Trump said the U.S. would respond if Iran continued its attacks.
“We’re going to hit them hard,” Trump said, according to a Fox News reporter. “There will be a response.”
Speaking to reporters at the White House, Trump said the renewed strikes did not mean a return to full-scale war, but added that the U.S. could still take further action.
"That doesn't mean we won't smack them. We'll see what happens," Trump said, while describing Iran as a "failed nation" whose economy and military had been severely weakened.
A senior Iranian source told Reuters the overnight exchanges of fire were a "limited and contained confrontation" but warned Tehran would deliver a harsh response if attacked again.
Iranian officials described the exchange as a limited confrontation but warned of further retaliation if attacked again.
The latest exchange marks the first direct U.S.-Iran military confrontation since late July, after weeks of pressure had largely focused on sanctions, blockades and economic measures.
The Strait of Hormuz remains at the centre of the dispute. The waterway normally handles around a fifth of global oil and gas shipments and has seen sharply reduced traffic since the conflict began.
Washington said its strike on Larak Island targeted Islamic Revolutionary Guard Corps (IRGC) forces preparing to launch rockets carrying sea mines into the strait.
The U.S. Central Command described the operation as a “limited, precise” action against what it called an imminent threat from IRGC minelaying forces.
Iran said the attack killed several people, including members of the Revolutionary Guards Navy, according to Iranian state media.
Alongside military action, Washington is continuing its economic pressure campaign against Tehran.
U.S. Treasury Secretary Scott Bessent said Iran was facing increasing economic strain from sanctions targeting Iranian entities and foreign companies trading with the country.
“They’re in shock at the state of their economy,” Bessent said, arguing that Iran’s military response was linked to the impact of sanctions.
Washington has said further secondary sanctions could follow, including measures targeting banks and financial institutions linked to Iran.
However, Iran has sufficient foreign currency reserves despite U.S. sanctions, Central Bank Governor Abdolnaser Hemmati said on Tuesday (1 September).
The central bank was ready to inject up to $2 billion into the foreign exchange market to calm recent volatility, Hemmati said, according to the semi-official Tasnim news agency.
“I am telling the President of the United States: Iran has (foreign) currency and it has enough,” he added.
Despite the escalation, Iranian President Masoud Pezeshkian said Tehran still supports a negotiated settlement.
“We believe that continuing the war is in no one’s interest, neither ours, nor the region’s, nor humanity’s,” Pezeshkian said, according to Iran’s Tasnim news agency.
However, the two sides remain divided over Iran’s nuclear programme, regional military activities and the future status of the Strait of Hormuz.
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The U.S. State Department approved a $2.7 billion military sale to Ukraine for air-defence development upgrades, along with related equipment and services, the department said. Meanwhile, Ukrainian authorities reported at least 10 people had died in Russian attacks over the last 24 hours.
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