US President Donald Trump on Monday threatened Iran as tensions rose between the two rivals, saying there would be great consequences if Tehran took military action.
"I’m hearing little stories about Iran," Mr Trump said. "If they do anything, they will suffer greatly. We’ll see what happens with Iran."
He said that if Iran attacked oil tankers in the Mediterranean Sea, its officials “won’t be happy people".
“It's going to be a bad problem for Iran if something happens, I can tell you that," Mr Trump said. "They're not going to be happy."
A report by The New York Times revealed late Monday that at a meeting of Mr Trump's top security aides last Thursday, Acting Defence Secretary Patrick Shanahan presented an updated military plan that envisions sending as many as 120,000 troops to the Middle East should Iran attack US forces or accelerate its nuclear weapons stockpile.
The plan does not call for a land invasion of Iran, which would require vastly more troops, officials told the newspaper.
Earlier on Monday, US Secretary of State Mike Pompeo held urgent talks with his European foreign ministers in Brussels to shore up allied backing for Washington.
Mr Pompeo held meetings with the ministers from France, Germany and the UK who were assembled in Brussels to discuss Iran’s recent threat to breach commitments of the 2015 nuclear deal.
He diverted to the European capital after rescheduling the first day of a planned trip to Russia.
The three ministers and the EU foreign policy chief, Federica Mogherini, were discussing the response to Iran’s announcement on Wednesday of a 60-day deadline for its plan to abandon commitments to the agreement.
Meanwhile, the UAE said it was investigating an apparent "sabotage attack" on four vessels, including two Saudi oil tankers, off the coast of Fujairah.
Also at the weekend, the US announced the return of a Patriot missile defence system to the Arabian Gulf because of a threat to US forces in the region.
Last week it sent B-52 bombers in response to Iranian threats.
"We are very worried about the risk of a conflict happening by accident with an escalation that is unintended on either side, but ends with some kind of conflict," British Foreign Secretary Jeremy Hunt said.
"I think what we need is a period of calm, to make sure everyone understands what the other side is thinking and most of all we must make sure we don't end up putting Iran back on the path to renuclearisation, because if Iran becomes a nuclear power its neighbours are likely to want to become nuclear powers.
"This is already the most unstable region in the world and it would be a massive step in the wrong direction."
Heiko Maas, the German Foreign Minister, said he had warned of the risks of confrontation in his meeting with Mr Pompeo.
"We are concerned about the development and the tensions in the region," Mr Maas said. "We do not want there to be a military escalation."
Ms Mogherini indicated that the EU remained supportive of the 2015 nuclear deal.
“We will continue to support it as much as we can with all our instruments and all our political will,” she said.
Analysts said the incident had also concentrated minds on the risks in the region.
Mr Pompeo's Brussels visit was seen as an attempt to push the EU to align with US interests but there was still resistance to the US demands on the deal and the reimposition of sanctions.
"The Trump administration is eager to show that Europe, too, is growing weary of the Iran nuclear deal," Esfandyar Batmanghelidj, founder of commentary site Bourse & Bazaar, told The National.
"Pompeo’s visit is intended to signal to the Iranians that Europe is growing more sympathetic to US concerns over Iran.
"But what Pompeo fails to appreciate is that however weary Europe might be of defending the deal, they are even more exasperated about dealing with a Trump administration that keeps lurching from one diplomatic crisis to another.
"The direction of Trump’s Iran policy has also sowed doubt in Europe as to Pompeo’s authority on foreign policy. In recent weeks he has been repeatedly outmanoeuvred by National Security Adviser John Bolton."
The European signatories said they regretted the decision by the US to reimpose sanctions on Iran, while Mr Trump said the sanctions “dramatically strengthened our national security”, before deriding the nuclear deal as “horrible” and “one-sided”.
He has also offered Iran direct talks, saying its leaders should “call me” and suggesting that America would help to revive the country’s economy if it did not stockpile nuclear weapons.
Mr Pompeo will meet Russian President Vladimir Putin and Foreign Minister Sergey Lavrov in the Black Sea resort of Sochi as planned on Tuesday, a State Department official said.
Against this backdrop, any suggested implication of Iran in the incident involving the tankers off Fujairah would heap pressure on Europe to support US efforts in the region. Crude oil prices rose as much as 2 per cent.
“There are plenty of reasons to believe Iran is responsible,” said Mark Fitzpatrick of the International Institute of Strategic Studies.
"After all, its leaders have said that if Iran cannot export oil, neither will its competitors in the Gulf. And just last week intelligence surfaced that Iran had empowered proxies to conduct attacks.
"But it cannot be ruled out that attacks were not directly ordered by Tehran."
Other analysts said judgment would be withheld until the investigation was conclusive.
“The attack is a dramatic escalation of the long-standing tensions between Iran and the Gulf states, most notably Saudi Arabia," said Ghanem Nuseibeh, founder of Cornerstone Global Associates.
"Investigations are ongoing and unless a third party is identified as the culprit, Iran will be seen as the one behind the attack.
"If that proves to be the case, the fallout could range from greater political isolation for Iran, through to a head-to-head conflict.
"Europe will find it hard to argue for a softening of the stance with Iran in as far as the current sanctions are concerned.
"The international community may put strong demands on Iran as a result of this."
In the 2015 agreement, Iran agreed to curtail its nuclear ambitions and refrain from developing ballistic missiles in return for a lifting of sanctions.
The US withdrew from the accord last year, leaving Europe striving to hold the deal together.
Mr Pompeo has previously been critical of the EU-backed "special purpose vehicle" to enable EU nations and Iran to trade essential goods such as food and medicine.
The EU ministers said they remain committed to trade with Tehran if it upheld its commitments in the nuclear deal, but there were limits to how much they could offer.