While flagging more sanctions, Trump had also said he wanted to make a deal to bolster Iran's economy in an apparent move to defuse tensions following the shooting down of an unmanned US drone this week by the Islamic Republic.

Trump has said he aborted a military strike to retaliate for Iran's downing of the drone because it could have killed 150 people.

"Neither Iran nor any other hostile actor should mistake US prudence and discretion for weakness. No one has granted them a hunting licence in the Middle East," US National Security Adviser John Bolton said on Sunday during a visit to Israel.

Iran has said it would respond firmly to any threat against it and warned on Sunday of the risks of a military confrontation.

"If a conflict breaks out in the region, no country would be able to manage its scope and timing," Major General Gholamali Rashid said, according to the semi-official news agency Fars.

"The American government must act responsibly to protect the lives of American troops by avoiding misconduct in the region."

Tensions in the region began to worsen significantly when Trump pulled out of a 2015 nuclear deal between Iran and six powers and reimposed sanctions on the country. The sanctions had been lifted under the pact in return for Tehran curbing its nuclear program.

Iran is feeling the effects of the sanctions, Bolton told reporters, adding Iran would never be allowed nuclear weapons.

"Iran's continued pursuit of nuclear weapons, its threats to exceed the limits set in the failed Iran nuclear deal in the coming days ... are not signs of a nation seeking peace," Bolton said.

"Sanctions are biting, and more added last night," he said. "Iran can never have nuclear weapons - not against the USA and not against the world."

US ally Israel, which has itself long threatened strikes against Iran's disputed nuclear program, signalled backing for Trump's stance.

"With all due respect to the fact that 150 Iranians were spared a cruel fate, the real major thing is the American policy (which) absolutely serves the interests of the world and of Israel in preventing Iran from getting nuclear weaponry," Regional Cooperation Minister Tzachi Hanegbi told Israel Radio.

Tensions in the Gulf can only be addressed politically and priority should be de-escalation and dialogue, a senior United Arab Emirates official said on Sunday.

"Crisis long in the making requires collective attention; primarily to de-escalate and to find political solutions through dialogue and negotiations," Minister of State for Foreign Affairs Anwar Gargash said in a Twitter post.

Australian Associated Press