Iran denied on Thursday attacking a South Korean cargo ship in the Strait of Hormuz this week, as U.S. President Donald Trump said a deal to end the war was "very possible" but warned Washington would resume bombing if talks failed.

Tehran's embassy in Seoul said it "firmly rejects and categorically denies" allegations that its armed forces were behind a blast aboard the Panama-flagged HMM Namu, which caught fire on Monday while transiting the strategic waterway with 24 crew members on board.

Iran foreign ministry spokesman Esmaeil Baqaei said Wednesday that a U.S. proposal to end the war is still "under review" by Tehran, local media reported.

The United States and a key mediator in the Middle East war expressed new hope of talks leading to a peace deal with Iran on Wednesday, after President Donald Trump halted a plan to guide ships through the Strait of Hormuz.

The White House believes it's getting close to an agreement with Iran on a one-page memorandum of understanding to end the war and set a framework for more detailed nuclear negotiations, two U.S. officials and two other sources briefed on the issue told U.S. news portal Axios.

China's Foreign Minister Wang Yi said Beijing would play a "greater role" in ending hostilities in the Middle East during talks with his Iranian counterpart on Wednesday, a week before U.S. President Donald Trump is due to meet Xi Jinping.

A container ship owned by French shipping company CMA CGM was the "target of an attack" in the Strait of Hormuz, the major shipping firm said on Wednesday.

"The CMA CGM San Antonio was the target of an attack yesterday while transiting the Strait of Hormuz, resulting in injuries among crew members and damage to the vessel," the shipping firm told AFP, adding those injured had been evacuated for treatment.

U.S. President Donald Trump said early Wednesday that he has paused the so-called "Project Freedom" to see whether a deal can be signed with Iran, after "great progress" was made toward "a complete and final agreement."

Israel's new air force chief Major General Omer Tischler said on Tuesday that Israel was prepared to deploy its entire fleet of fighter jets against Iran if necessary.

He spoke weeks into a fragile ceasefire in the Middle East war, which erupted when Israel and the United States launched strikes against Iran in February.

Iran's Revolutionary Guards warned on Tuesday that they would respond firmly to any ships that diverge from the Islamic republic's approved route through the Strait of Hormuz.

Hours after the UAE's top oil executive said the country had "emerged stronger" from war and as thousands attended an Abu Dhabi summit to boost the local economy, phones across the country were alerting that missiles were incoming.

The first attacks since a truce came into effect last month were a stark reminder of its fragility, dampening hopes of a quick return to normality, with Iran imposing a new reality: should the United States or Israel strike, the UAE would be the one to pay.