Iran’s leadership warned of a regional conflict on Sunday if the U.S. were to attack it, stoking the tension between Washington and Tehran, and it designated EU armies as “terrorist groups” in a retaliatory move.

The United States has ramped up its naval presence in the Middle East after President Donald Trump repeatedly threatened Iran with intervention if it did not agree to a nuclear deal or failed to stop killing protesters.

Despite the standoff between Iran’s clerical rulers and the Trump administration, both sides have signalled they are ready to resume talks, and regional allies such as Turkey have sought de-escalation.

An Iranian official denied an earlier report by state-run Press TV that the Revolutionary Guards’ naval forces would conduct live-fire exercises in the Strait of Hormuz on Sunday and Monday, telling Reuters they have no such plan and the media reports are wrong.

Supreme Leader Ayatollah Ali Khamenei was quoted on state media as saying that although Trump says he has sent ships to the region, “the Iranian nation shall not be scared by these things, the Iranian people will not be stirred by these threats.”