US President Donald Trump terminated 'Project Freedom' after backlash from Saudi Arabia, US officials have revealed.

Saudi leadership was blindsided by Trump's plan to secure shipping in the Strait of Hormuz, prompting the Kingdom to inform the US that it would deny permission for American military aircraft to use Prince Sultan Airbase or enter Saudi airspace for the operation. 

Two US officials said a call between Saudi Crown Prince Mohammed bin Salman and Trump did little to diffuse the tension, forcing the US President to axe the project, NBC News reports. 

Other Gulf allies were also caught by surprise when Trump initially revealed the plan, with one Middle Eastern diplomat telling the outlet that the US did not coordinate Project Freedom with Oman until after he made the announcement. 

Qatar was also informed after the project had already began, with the emir urging de-escalation in a call with Trump. 

Trump had launched the new initiative on Sunday to wrest control of the critical waterway from Iran, which ‌effectively closed the strait after the US and Israel started the conflict on February 28.

He said that he made the decision to pause 'Project Freedom' in response to requests from Pakistan and other nations, while claiming progress being made on an agreement with Tehran was also a factor.

A post to Truth Social read: 'Based on the request of Pakistan and other Countries, the tremendous Military Success that we have had during the Campaign against the Country of Iran and, additionally, the fact that Great Progress has been made toward a Complete and Final Agreement with Representatives of Iran, we have mutually agreed that, while the Blockade will remain in full force and effect, Project Freedom (The Movement of Ships through the Strait of Hormuz) will be paused for a short period of time to see whether or not the Agreement can be finalised and signed.' 

The decision came shortly after US Secretary of State Marco Rubio said the initial US-Israeli offensive against Iranian targets, known as 'Operation Epic Fury', was 'over' and that its objectives had been achieved.

A US official reported that the military was preparing more ships in the Gulf for transit when the operation was halted.

US Central Command confirmed that two US-flagged vessels successfully passed through the strait under Project Freedom.

Saudi Arabia had previously allowed the US military to fly aircraft from there to support the war in Iran, and Washington maintains air defenses, aircraft and refueling tankers at the Prince Sultan Airbase.

'Because of geography, you need cooperation from regional partners to utilize their airspace along their borders,' one US official explained.

In response to the announcement of 'Project Freedom', the Islamic Revolutionary Guard Corps (IRGC) warned that any ship found violating the regime's maritime rules would be stopped by force.

In a rapid escalation of hostilities on Monday, the UAE intercepted 15 missiles and four drones fired from Tehran, while an Iranian attack caused a fire to erupt at the oil port of Fujairah.

The UAE was forced to issue its first missile alert since the fragile ceasefire between the US and Iran was announced last month.

Tehran's decision to launch these attacks officially resumed hostilities between the Islamic Republic and the US in the Middle East.

Meanwhile, a container ship owned by French shipping company CMA CGM was the 'target of an attack' in the crucial waterway, the major shipping firm said on Wednesday.

After Trump halted the project, Iran branded the move as a 'retreat' after the US President's 'continued failures' to use American naval power to reopen the crucial waterway.

'Following Iran's firm positions and warnings, and the failure of the United States to achieve its objectives in the so-called "Freedom Project", Trump announced the suspension of this project,' said a statement on INSA, an Iranian state-run media outlet.

Trump has been infuriated by the stalemate but is reluctant to be drawn back into a full-scale conflict amid fears it will exacerbate the crisis in the Strait of Hormuz.

Foreign Ministry spokesman Esmail Baghaei said in an interview with Iranian media that Tehran was reviewing a new peace proposal with the US.

Taking to social media on Wednesday, Trump said the war could end if 'Iran agrees to give what has been agreed to.'

Speaking yesterday from the Oval Office, the US President added that there had been 'very good talks over the last 24 hours.'

The strait has ​been virtually shut since the conflict began, blocking about 20 per cent of world oil supplies and igniting a global energy crisis.

Defence Secretary Pete Hegseth insisted Tuesday that the ceasefire is holding - even as he admitted Iranian forces had attacked US troops nearly a dozen times since the pause in fighting.

He told a Pentagon briefing: 'The US aims to protect shipping from Iranian aggression.

'The US won't need to enter Iranian airspace or waters as part of opening the Strait of Hormuz. We're not looking for a fight. They said they control the strait, they do not.'

His remarks came after Iran's chief negotiator warned Tehran has 'not even started' in the battle to control the strait, hours after attacks were traded in the waterway.

Chairman of the Joint Chiefs of Staff General Dan Caine said Iran had 'attacked US forces more than 10 times' since the ceasefire began last month.

Tehran has refused to come back to the negotiating table, even under mounting pressure from the US blockade of its ports.

Speaking to reporters in the White House briefing room, Rubio said the US blockade on Iranian ports would continue until the Islamic regime ceases efforts to prevent free maritime traffic through the Strait of Hormuz through what he described as 'piracy'.

He went on to brand the top brass in the Iranian government as 'insane in the brain'.

'The time has come for Iran to make a sensible choice, and it's not easy for them to do that, obviously, because they have a fracture in their own leadership system,' he said.

Iran has effectively sealed off the strait by threatening to deploy mines, drones, missiles ‌and fast-attack ⁠craft. The United States has countered by blockading Iranian ports and mounting escorted transits for commercial vessels.