US President Donald Trump has said "there are very friendly negotiations going on" about the conflict with Iran, after the warring sides did not exchange strikes for a third straight day.

He expressed optimism for an end to the war on Monday, telling reporters aboard Air Force One: "I think there's a good chance that something could happen."

However, he warned that Washington would "go back to doing what we were doing" before the pause in fighting if the latest negotiations failed.

Tehran has denied that any direct negotiations are taking place.

Trump said he had decided to pause US strikes on Iran on Friday because the countries mediating between them had asked him to give the talks another chance.

Iran has also halted its attacks.

The pause follows nearly two weeks of daily US strikes and tit-for-tat attacks, effectively unravelling the ceasefire struck in June.

The US military said at the time that its strikes were aimed to "degrade Iran's ability to threaten commercial shipping in the Strait of Hormuz" - a global route for transporting oil.

The price of oil on Monday fell by more than 9% to $87.59 a barrel at one point on hopes the conflict could be de-escalated.

Aboard the presidential plane, Trump also dismissed media reports that after five months of fighting, US ammunition stockpiles were now running low.

"We have a lot of ammunition. We have a lot of the mid-level stuff too, more than we could ever use, no matter what," Trump said. "But we have a lot. I'd like to have more."

He said a "lot of equipment" was being built, in particular Patriots - highly valued US-made anti-ballistic missiles.

"That system is going up. We have a lot," he said.

Meanwhile, White House spokesperson Anna Kelly said the US military "has more than enough munitions, ammo, and stockpiles to serve all of President Trump's strategic goals and beyond, and Operation Epic Fury has exposed what happens when you mess with the United States."

"Even still, the president has urged our defence contractors to constantly produce more made-in-America weapons, which are the best in the world," the spokesperson added.

The US and Israel launched their strikes against Iran on 28 February. Tehran retaliated by firing missiles and drones on US military bases and other assets located in Gulf states, as well as on targets inside Israel.

In June, Iran and the US signed a memorandum of understanding to stop military operations and reopen the Strait of Hormuz, as well as to reach an agreement to end the war over the following 60 days.

But after Iranian forces attacked tankers in the waterway on 13 July, Washington resumed air strikes against Iran and reinstated its naval blockade of the country's ports.

Tehran retaliated with attacks on US military facilities and bases across the Middle East, killing four American soldiers. The US strikes have since killed dozens of people, according to Iran's health ministry.