Iran's supreme leader threatens US with oil blockade

Iranian Supreme Leader Ayatollah Ali Khamenei has threatened to blockade oil leaving the Gulf after the United States backed out of a nuclear deal with his country and announced new sanctions against Iran earlier this year.

Khamenei warned US President Donald Trump not to escalate tensions with Iran on Sunday: "Americans should know that peace with Iran is the mother of all peace ... likewise a war would be the mother of all wars."

Iranian President Hassan Rowhani has also hinted at closing the Strait of Hormuz, a waterway that connects the Gulf to the Indian Ocean and is the main transport route for oil leaving the region.

Oil-rich Iran has been seeking a way out of an economic crisis with its currency losing value rapidly as concern has grown about sanctions after the US backed out of a multilateral agreement with Iran in May.

Six major powers agreed with Iran in Vienna in 2015 to curb Tehran's civilian nuclear programme so that it cannot be used for developing atomic weapons, while sanctions were lifted in return.

After the US pulled out of the nuclear agreement, Iran made clear that it wants to keep the deal alive, but only if the remaining five powers can guarantee that Iran will not face economic isolation under the sanctions that the US has started to revive.

On Saturday, Khamenei rejected calls from within his country's leadership to negotiate with Trump.

Rowhani has also rejected eight different requests for a meeting from Trump, Rowhani's chief of staff said this week.