Trump says he has agreed to two-week ceasefire with Iran

US President Donald Trump says he has agreed to a two-week ceasefire with Iran, less than two hours before his deadline for Tehran to reopen the Strait of Hormuz or face devastating attacks on its civilian infrastructure.

Trump's announcement on social media represented an abrupt turnaround from earlier in the day, when he issued an extraordinary warning that "a whole civilization will die tonight" if his demands were not met.

Iran said talks between the US and Iran would begin on Friday in Islamabad, Pakistan, whose prime minister helped mediate the ceasefire. Iranian state TV claimed Trump had accepted Iran's terms for ending the war, describing it as a "humiliating retreat" by the US president.

Trump said the last-minute deal was subject to Iran's agreement to pause its blockade of oil and gas supplies through the strait, which typically handles about one-fifth of global oil shipments. Iran's foreign minister, Abbas Aragchi, said in a statement that Tehran would stop counter-attacks and provide safe passage through the Strait of Hormuz.

"This will be a double sided CEASEFIRE!" Trump wrote on his Truth Social platform. "The reason for doing so is that we have already met and exceeded all Military objectives, and are very far along with a definitive Agreement concerning Longterm PEACE with Iran, and PEACE in the Middle East."

The war, now in its sixth week, has claimed more than 5,000 lives in nearly a dozen countries, including more than 1,600 civilians in Iran, according to tallies from government sources and human rights groups.

CONDITIONED ON STRAIT'S REOPENING

Two White House officials confirmed that Israel has also agreed to the two-week ceasefire and to suspend its bombing campaign on Iran. Israeli media reported that the cessation of hostilities would begin once Iran reopened the strait and that Israel expected Iranian attacks to continue in the interim.

A few minutes after Trump's announcement, the Israeli military said it identified missiles launched from Iran towards Israel.

Trump, who has issued a series of threats in recent weeks only to back away, said progress between the two sides had prompted him to agree to the ceasefire. He said Iran had presented a 10-point proposal that was a "workable basis" for negotiations and that he expected an agreement to be "finalised and consummated" during the two-week window.

Markets breathed a sigh of relief, with US stock futures rising in the minutes following Trump's message. Oil prices fell sharply, with US crude futures dropping more than 17 per cent to just over $92 a barrel.

ABRUPT TURNAROUND

Trump's announcement capped a whirlwind day that was dominated by his threat to destroy every bridge and power plant in Iran unless Tehran reopened the strait. That unnerved world leaders, rattled global financial and energy markets and drew widespread condemnation, including criticism from the head of the United Nations and Pope Leo.

Some international law experts have said attacking civilian infrastructure indiscriminately could constitute a war crime.

The closure of the strait, through which almost a fifth of the world's oil supply typically travels, has sharply increased oil prices, escalating the chances of a global economic downturn or even recession. The US Energy Information Administration earlier on Tuesday warned that fuel prices could continue to rise for months even after the strait reopened.

With the US midterm election campaign ramping up, Trump's approval ratings have hit their lowest level ever, leaving his Republican Party at risk of losing its grip on Congress. Polls show sizable majorities of Americans opposed to the war and frustrated by the rising cost of gasoline.

As the clock ticked down to Trump's 8:00 p.m. EDT (0000 GMT) deadline, US and Israeli strikes on Iran had intensified, hitting railway and road bridges, an airport and a petrochemical plant. US forces attacked targets on Kharg Island, home to Iran's main oil export terminal.