AS IT HAPPENED: US confirms clash with Iranian forces; Rubio meets with Pope in fence-mending visit after Trump's insults; Iran lays out rules for the Strait of Hormuz; Trump calls the EU on nukes

Thanks for following along with today's coverage of the war in Iran.

Here are today's key developments.

Iran fired missiles at two US warships travelling through the Strait of Hormuz, before the American fleet retaliated. There were no injuries reported, but US accounts of damage to vessels differ from Iranian claims.

Brent crude futures prices jumped after Iran and the US traded blows, but they've gradually dropped since, currently trading just above $US100 per barrel.

The Pope met with US Secretary of State Marco Rubio on a fence-mending visit following tense exchanges between the pontiff and President Donald Trump.

In a discussion with the EU, Trump discussed the war with Iran, also taking the opportunity to impose a July 4 deadline on the union to fulfil its side of a tariff deal.

Major shipping and logistics company Maersk has said it will have to pass rising costs onto consumers as the global ripple effect of the US war with Iran widens.

The United Arab Emirates' Ministry of Defence announced that the country's air defences were "actively engaging" with a missile and drone attack from Iran.

Brent crude futures prices jumped after Iran and the US traded blows in the Strait of Hormuz earlier today.

The international benchmark peaked at $US103.60 at 18:00 UTC (5am AEDT), before mellowing to $101.12 per barrel, where it currently stands as of 3pm AEST.

The spike came after Iranian and American naval ships exchanged fire in the critical waterway, which President Trump insisted did not jeopardise the ceasefire, describing the clash as "just a love tap".

Brent crude futures fell as low as $96.75 per barrel yesterday before spiking 7 per cent after the two nations exchanged fire.

Israel's defense forces claim they killed 20 Hezbollah fighters and destroyed an underground tunnel in focused airstrikes in southern Lebanon overnight.

The IDF issued evacuation warnings to several southern villages before it claimed it raided more than a dozen terrorist infrastructure sites, including warehouses, command headquarters, launch sites and military buildings.

"The division's forces also destroyed an underground course approximately 30 metres long in the Labouneh area, along with more than 200 terrorist infrastructure facilites belonging to the terrorist Hezbollah in southern Lebanon," IDF spokesperson Avichay Adraee said.

Soldiers also killed a Hezbollah commander in a southern suburb of Beirut a day earlier, according to IDF Adraee, despite a ceasefire declaration on April 17.

Attacks from both sides have continued in southern Lebanon since the ceasefire declaration,

According to Lebanon's health ministry, 2715 people in Lebanon have died, and 8353 more have been injured by Israeli strikes since the beginning of the conflict.

The United Arab Emirates' Ministry of Defense announced that the country's air defenses are "actively engaging" with a missile and drone attack.

The ministry advised residents not to approach, photograph or touch "any debris or fragments that have fallen as a result of successful air interceptions".

Aussie consumers should expect further price increases at the checkout, as suppliers concede "every single link in the chain is more expensive" following sustained impacts of the war in Iran.

A "perfect storm" of global conflict, rising energy costs and domestic pressures is driving further grocery price increases, new data from the Australian Food & Grocery Council (AFGC) shows.

Brent crude oil prices have risen 39 per cent year-on-year to March this year, while container freight costs have increased 22 per cent.

Fertiliser markets relied upon by farmers have been particularly impacted, after urea prices surged almost 70 per cent as a result of disruptions to the Strait of Hormuz.

The price of wheat is up 8 per cent and soybean oil prices have skyrocketed by 52 per cent, according to AFGC.

The compounding effects of the war, combined with the recent interest rate hike in May, means suppliers can no longer weather soaring production costs alone, AFGC said.

"What we are seeing now is deeper than a temporary logistics bottleneck," Australian Food & Grocery Council chief executive Colm Maguire said.

"This is a fundamental shift in the cost of doing business. From the fertilisers used on our farms to the fuel in the trucks that transport and the energy powering our factories, every single link in the chain is more expensive."

Almost every AFGC member reported input costs rising since the beginning of the war, with more than half of them stating cost increases between 5 and 20 per cent.

A major shipping and logistics company has said it will have to pass rising costs onto consumers as the global ripple effect of the US war with Iran widens.

"We're looking at an extra cost bill of half a billion (US) dollars ($693.5 million) a month that we're going to face basically from April and for as long as this lasts," Maersk chief executive Vincent Clerc told CNN.

"Obviously this is a significant amount and there is something that we can do on cost mitigation which we will do, but the rest of it is really a commercial conversations with customers about having to pass this cost on because otherwise this is completely unsustainable for us."

Maersk has six ships stranded in the Persian Gulf.

Former FBI Director James Comey has asked to cancel his upcoming court appearance in North Carolina, saying it was unnecessary because he had already surrendered in Virginia and faced a judge on charges that he threatened US President Donald Trump.

The Department of Justice is supporting the request.Comey was charged in a two-count indictment last week with "knowingly and willfully" communicating a threat against Trump by posting an Instagram photo of seashells in the numerical arrangement of "86 47".

Prosecutors allege the photo constituted a threat against Trump, the 47th president. Comey has said he assumed the seashell arrangement, which he says he found on a beach, reflected a political message — not a call to violence — and that he removed the post once he saw that some people were interpreting it as a threat.

He is currently set to appear Monday in a federal court in Greenville, North Carolina, but his lawyers urged a judge on Thursday to cancel that appearance. They noted that he had surrendered and appeared last week before a judge in Virginia, where he lives, and that the Justice Department has consented to their request.

Responding to the defence filing, the judge in the case said she would cancel the court date provided that Comey files a waiver of appearance on or before Friday.

The case is the second brought by the Trump administration Justice Department against Comey, a longtime perceived adversary of the Republican president.

An earlier unrelated prosecution accusing Comey of making a false statement to Congress was dismissed by a judge who concluded that the prosecutor who filed the case was illegally appointed.

A former US diplomat and Middle East expert says even if Iran accepts the current US peace proposal, the road back to anything resembling normality will be a long one.

"I'm not breaking open the champagne," Alan Eyre, distinguished diplomatic fellow at the Middle East Institute, told ABC Radio National.

"Even if they agree to this one-page document, that signals the start of negotiations, not the end of it."

And, he said, would still take "months" for the global supply chains to respond to an immediate reopening of the Strait of Hormuz.

Trump claimed today that the document provided to Iran was "more than one page".

"It's an offer that basically said they will not have nuclear weapons, they are going to hand us the nuclear dust and many other things that we want," he said.

He claimed the Iranians had agreed, but then said that was not of particular import "because the next day they forgot they agreed."

"And you know, we're dealing with different sets of leaders," Trump said.

Trump's delivered mixed messages about peace prospects.

After earlier demanding Iran sign a deal "soon" in a Truth Social post, the president was more ambiguous in his remarks to reporters.

"It could happen any day but it might not happen," he said.

He reiterated that the US would not permit Iran to possess a nuclear weapon.

"We won't give them the right to have a nuclear weapon, they know that, and they have agreed to that, so let's see if they're willing to sign it," he said.

Iranian leaders publicly have said they will maintain their right to their nuclear program.

Trump, meanwhile, claimed Iran "want to sign (the agreement) a lot more than I do".

In further remarks to reporters at the repainted Lincoln Memorial Reflecting Pool, Trump may have suggested the US would respond to a broken ceasefire with a nuclear strike.

"You won't have to know if there's no ceasefire," he said.

"You'll just have to look at one big glow coming out of Iran."

The "glow" could reference radioactivity, and Trump has referenced the "destruction" of Iran and its civilisation in his threats before.

If there's a sliver of doubt as to what he's referencing, then perhaps he could simply be referring to the glow cast by flames.

Trump also again downplayed this mornings attacks, saying Iran "trifled" with the US. This was after he told ABC US the attacks were a "love tap".