Iran's seizure of a South Korean tanker and increased uranium enrichment, and a larger US military presence in the Gulf have heightened fears of confrontation between Tehran and Washington.
On Monday, Iran announced that it had resumed enriching uranium to 20 per cent purity in a clear breach of the nuclear deal signed between Tehran and world powers in 2015.
The move that will exacerbate tension with the US and Europe.
"Iran enriching uranium to 20 percent at Fordow is a clear attempt to increase its campaign of nuclear extortion, an attempt that will continue to fail," a US State Department spokesperson said after the news.
Tehran also seized a South Korean chemical tanker in the Strait of Hormuz on Monday and Islamic Revolutionary Guard Corps gunboats led the Hankuk Chemi towards Bandar Abbas port.
The two acts of defiance from Iran came only hours after US acting Secretary of Defence Chris Miller reversed a decision and ordered a US aircraft carrier to stay in the Gulf.
The US has also sent B-52 bombers to the region in the past two months.
"Due to the recent threats issued by Iranian leaders against President [Donald] Trump and other US government officials, I have ordered the USS Nimitz to halt its routine redeployment," Mr Miller said on Sunday night.
“No one should doubt the resolve of the United States of America.”
With 16 days left in office for Mr Trump and the IRGC pledging revenge attacks for the US killing its leader Qassem Suleimani a year ago, the risk of confrontation is high, although neither Iran nor the US want it for now.
Experts say Iran is trying to box in US president-elect Joe Biden during the coming nuclear negations.
Richard Goldberg, a former US official and an adviser to the Foundation for Defence of Democracies, said Iran’s actions were an attempt to pressure Mr Biden and Europe into sanctions relief.
"The mullahs [in Iran] are one-trick ponies: escalate tensions wherever possible to build political pressure in Washington and Europe for sanctions relief," Mr Goldberg, a former White House adviser to the Trump administration on Iran, told The National.
He said the regime’s actions in the Gulf and on enrichment were “setting the table for a Biden administration to use these crises as a political pretext to offer sanctions relief to Iran under the banner of de-escalation".
Seizing the tanker was deliberately aimed at South Korea and the US, Mr Goldberg said.
“Tehran wants South Korea to release funds that are currently inaccessible because they sit in accounts subject to US terrorism sanctions," he said.
Mr Goldberg called it "a great irony of Iran engaging in terrorism to win release of funds frozen due to financing terrorism".
The increase in enrichment exposed a major weakness in the 2015 nuclear, which the US abandoned in 2018, he said.
“Paying Iran to pause enrichment today allows the regime to again threaten expanded enrichment at any time in the future,” Mr Goldberg said.
While he considered direct confrontation between the US and Iran to be unlikely before Mr Trump left the White House, Ali Vaez of the International Crisis Group said the situation was a “perilous gambit”, with the unpredictable president in his last two weeks in office.
"The Iranians clearly want to strengthen their hand and accumulate more leverage before [Joe] Biden's inauguration, while deterring the Trump administration from bloodying their nose on its way out," Mr Vaez, the group's Iran Project director, told The National.
While on one hand it creates “more leverage to pressure Mr Biden to quickly restore the nuclear deal and lift the sanctions, it is happening in the waning days of a trigger-happy president who seeks any distraction that could prolong his grip on power", he said.
"We have confidence that the [International Atomic Energy Agency] will monitor and report on any new Iranian nuclear activities," the spokesperson at the US State Department said later Monday.
At the Pentagon, US military leaders have been insisting that Washington is not seeking escalation, but will be ready to protect its interests in the region.