President Trump has confirmed Iran is in serious discussions with the US following the steady build-up of American military forces in the Gulf.
The US president said he hoped negotiations with Iran would lead to something acceptable, as tensions between the two countries remain high.
Iran's top security official Ali Larijani also said a framework for negotiations was progressing.
Trump has threatened to intervene in Iran over its nuclear ambitions and after its deadly crackdown on anti-government protests. Iran has stated it would respond immediately and powerfully to any aggression by land or sea.
Iran is expected to begin a two-day, live-fire naval exercise on Sunday in the Strait of Hormuz - a critical waterway for global oil supplies.
Around a fifth of the world's traded oil passes through the Strait of Hormuz, which measures about 33km (21 miles) at its narrowest point. Iran has previously threatened to close this strategic route in retaliation for any military action against it.
The US has warned Iran against any unsafe and unprofessional behaviour near American military forces in the region, as the USS Abraham Lincoln aircraft carrier is deployed to the area.
Iran's Foreign Minister Abbas Araghchi criticized the US presence by stating, The US military is now attempting to dictate how our Powerful Armed Forces should conduct target practice in their own turf.
Amidst these tensions, two explosions in Iran heightened anxiety in the country, with varying reports about their cause, including local authorities attributing them to gas leaks.
As pressures mount, Trump has insisted on two conditions to avoid US military action: Number one, no nuclear. And number two, stop killing protesters. According to reports from human rights organizations, over 6,300 individuals have been killed since the protests began, with the final toll potentially rising to above 25,000.
