Within Iran, the renewed bombing has left residents anxious, following huge week-long memorial events for slain Supreme Leader Ayatollah Ali Khamenei that the authorities depicted as a demonstration of victory and national solidarity.
"Living with this fear that war could start again is very exhausting. You cannot live like this ... Personally, I want diplomacy to prevail," Mahlegha, 46, a government employee, told Reuters by phone message from Tehran.
Iran wants all ships using the Strait of Hormuz to travel through a channel close to its shores, and has made no secret that it intends to charge passage fees at the end of a 60-day negotiation period set in last month's memorandum.
Washington had encouraged ships to use an alternative route to the south, along the Omani coast.
U.S. forces say their airstrikes have hit Iranian military targets along the coast to cripple its ability to control the strait. Iranian military spokesperson Brigadier General Mohammad Akraminia said on Thursday this would never work because Iran can strike the strait from anywhere on its territory.
Three U.S. officials told Reuters that U.S. strikes could also serve as "shaping operations", giving Trump more options by targeting Iranian military capabilities that the U.S. would want to destroy before taking bigger steps. "This is helping set the stage, if needed," one of the officials said.
Trump has not ruled out the possibility of using ground forces, including to seize Kharg Island, site of Iran's main oil export terminal. He has repeated threats to hit Iranian power plants and bridges next week unless Tehran resumes negotiations.
Alex Vatanka, senior fellow and director of the Iran program at the Middle East Institute in Washington, said the warring sides were "back to square one", reaching the limits of what they could achieve in the context of limited war and would eventually face a choice of whether to back down or escalate.
For now, Iran's retaliatory strikes have been focused on U.S. bases in neighbouring countries. Iran said on Thursday it had fired on a Jordanian air base that Washington has upgraded in recent years into a regional headquarters.
It said the Jordanian base had been used to launch an attack on a children's cancer hospital in the city of Ahvaz on Wednesday night. Staff there said the hospital was evacuated after a missile hit 200 metres (yards) from the main building.
"Some patients had to return this morning because we can't interrupt their treatment," said Amin Goodarzi, director of public relations at the Ahvaz Jundishapur University of Medical Sciences, which oversees the Shahid Baghaei hospital.
"The majority have yet to return," he added.
Shipping through Hormuz is hit again
The re-escalation has once again largely halted traffic through Hormuz, the world's most important shipping route for oil and gas, pushing up global energy prices.
Iran triggered the renewed fighting last week by striking ships moving through a corridor in the strait, provoking a dangerous fire on board a Qatari tanker filled with liquefied natural gas.
Karoline Leavitt, White House press secretary, told a briefing on Thursday that Trump would not "sit by and allow these active acts of terrorism to take place in the strait without ensuring Iran pays consequences for that."
But she added the president was "always open to diplomacy at the very same time."
Iranian sources told Reuters that Iran's aim was to establish its authority over the strait, although otherwise Tehran is not keen on a wider escalation that would torpedo June's preliminary deal, which it still regards as giving it most of what it sought.
Strikes hit Qeshm Island and Bandar Abbas
On Thursday evening, U.S. projectiles struck Qeshm Island and near Bandar Abbas — home to Iran's largest port and key navy and Revolutionary Guards facilities — both on the Strait of Hormuz. Several locations in Bandar Abbas were hit by projectiles at 9:35 p.m. local time, the semi-official Mehr news agency reported, attributing the attack to the "American enemy."
Iran has signalled it could prod its Houthi allies in Yemen to close another key strait: the Bab al-Mandeb at the mouth of the Red Sea. Sources told Reuters Iran had already told the Houthis to shut it if Washington carries out threats to attack Iran's infrastructure.
The week of increasingly intense exchanges has tested the boundaries of the restraint both sides largely observed during four months of fighting before last month's truce. Yet even as the attacks escalated, Trump on Wednesday welcomed what he described as the release of a U.S. citizen detained in Iran, identified by a human rights lawyer as Dena Karari, calling it a gesture of goodwill by Tehran.
On Thursday, however, Iran's judiciary challenged that account, saying no American prisoner had been released or exchanged from Iranian prisons, according to state media.
Escalating strikes continue for a sixth night
DUBAI, July 16 (Reuters) - Iran and the United States exchanged intensifying fire on Thursday in a week-long escalation that has largely unraveled last month's truce, while Tehran disputed President Donald Trump's claim that a U.S. citizen had been released.
For the first time since a memorandum of understanding paused fighting last month, the United States launched two big waves of air strikes in a single day on Wednesday, mostly on targets near Iran's southern coast, and kept firing on Thursday.
In a statement, U.S. Central Command said U.S. forces began "a new wave of strikes against Iran for the sixth consecutive night to further degrade Iranian military capabilities" at 2 p.m. EDT (1800 GMT) or 9:30 p.m. in Tehran.
Tehran has countered with missiles and drones targeted at U.S. military bases in neighbouring states, including a barrage at a recently expanded air base in Jordan.
After Tehran resumed its blockade of the Gulf through the Strait of Hormuz, Washington again blockaded Iranian ports from Wednesday.
The U.S. military said it fired on a tanker near Iran's Kharg Island, with Hellfire missiles hitting its smokestack.
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