Understandings have been reached to ease the United States' naval blockade in exchange for the gradual reopening of the Strait of Hormuz, Al Arabiya reported on Thursday citing sources, after US President Donald Trump said a deal to end the war between the US, Israel and Iran was "very possible".

Discussions are ongoing regarding the situation in the strategic waterway, the Riyadh-based media outlet said, although there was no immediate confirmation from Iran or the US.

It came as Tehran on Thursday denied attacking a South Korean cargo ship in the strait earlier this week. The Iranian embassy in Seoul said it "firmly rejects and categorically denies" allegations that its armed forces were behind a blast on Monday aboard the Panama-flagged HMM Namu, with 24 crew members on board. Trump later claimed Iran had "taken some shots" at the vessel and urged South Korea to join the so-called Project Freedom initiative to reopen the vital waterway.

Despite the incident, hopes for progress have emerged after weeks of deadlock as Trump suspended the short-lived military operation.

"We've had very good talks over the last 24 hours, and it's very possible that we'll make a deal," Trump told reporters on Wednesday. But he warned earlier that if Iran fails to honor any agreement, bombing would resume "at a much higher level and intensity".

Launched by the US and Israel in late February, the conflict has seen Iran launch retaliatory strikes across the region.

Despite Trump's upbeat tone, Iran has yet to formally respond to Washington's new proposal. Parliament Speaker Mohammad Bagher Ghalibaf said the US aims to force Tehran to surrender through "a naval blockade, economic pressure and media manipulation designed to destroy the country's cohesion".

Iranian Foreign Ministry spokesman Esmaeil Baghaei confirmed that the US proposal remains under review, adding that Tehran will relay its official stance to mediator Pakistan once internal deliberations are finalized, Iran's ISNA News Agency reported.

US media outlet Axios, citing unnamed officials, reported on Wednesday that both sides were close to reaching a one-page memorandum of understanding to end hostilities and set a framework for future nuclear negotiations.

Washington appears more serious about striking a peace deal with Iran, yet major questions remain over the concessions it is prepared to make, said Mohamad Elmasry, a professor at the Doha Institute for Graduate Studies in Qatar.

Demands omitted

The draft memorandum omits several long-standing US demands that Iran has repeatedly rejected, including curbs on Tehran's missile and nuclear programs. Elmasry told Al Jazeera: "That may be seen as a negative sign — the proposal fails to address some of Iran's core concerns in an acceptable way."

Prospects of a potential detente buoyed the global markets. Tokyo's Nikkei index surged more than 4 percent on Thursday, leading broad gains across Asian equities.

Meanwhile, global oil prices slid to a two-week low on Wednesday, with benchmark Brent crude falling around 11 percent to nearly $98 a barrel at one stage.

Iran's President Masoud Pezeshkian said on Wednesday his country is ready to pursue diplomatic paths to end the war, while insisting on safeguarding the nation's rights.

Meanwhile in Lebanon, Israel pummeled southern parts of the country on Thursday, state media and AFP correspondents said, a day after it targeted a Hezbollah commander in its first strike on Beirut's southern suburbs since a truce sought to end weeks of fighting.

The Israeli army said Thursday that the strike on the southern suburbs killed "the Commander of Hezbollah's 'Radwan Force' Unit", an elite unit within Hezbollah.

A ceasefire in the fighting between Hezbollah and Israel began on April 17, but combat has largely not stopped in southern Lebanon. Wednesday's strike near the capital, however, came as a shock in Lebanon.

Contact the writers at cuihaipei@chinadaily.com.cn.