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The US command says it is conducting more strikes to degrade Iran's armed forces, as Iran reports explosions near the Strait of Hormuz.
The US says its attacks aim to "further degrade Iranian military capabilities", as fighting continued for the sixth day in a row.
The US vice president says he thinks some Israeli politicians are trying to detail efforts to end the conflict.
Explosions were heard across Iran overnight, shortly after neighbouring Gulf states began to report attacks.
President Donald Trump vowed to strike Iran's bridges and power plants next week if the country does not return to talks.
Craig and Lindsay Foreman were arrested on spying charges last January while passing through Iran on a motorcycle journey.
The abrupt about-face from the US president was the latest twist in a conflict that has now lasted more than four months.
Control of the waterway has become a key point of contention between the US and Iran, as a ceasefire deal falters.
Trump drops a 24-hour-old vow to charge cargo ships for using the Strait as the US continues its battle to break Iran's hold on the waterway.
Iran has repeatedly restricted access to the Strait of Hormuz, one of the world's busiest oil shipping channels.
The US military says it's trying to "degrade" Iran's ability to hit ships in the Strait of Hormuz. Jordan, Kuwait and Bahrain all report apparent retaliatory strikes by Iran.
The US president also says Washington will charge a 20% toll on all cargo shipped through the Strait of Hormuz.
Within hours of the fresh US strikes, Iran said it had struck US military bases in Jordan and Bahrain, as escalating attacks cast strain interim deal.
Mojtaba Khamenei says vengeance is "inevitable" for the killing, which happened on the first day of the US-Israeli war on Iran.
Top US advisers, including Vice-President JD Vance, are expected to continue negotiations on Saturday in Oman.
Ali Khamenei will be buried at the Imam Reza shrine, Iran's holiest Shia Muslim site, ending six days of public mourning ceremonies.
Explosions have been reported by Iranian state media in parts of the country's south.
The negotiating process is fragile and recent US strikes show how hard it will be to reach agreement, writes BBC's International Editor Jeremy Bowen.
The remains of Iran's late supreme leader are transported to Najaf and Karbala, as funeral ceremonies continue for a fifth day.
Joe Bennett is visiting Parliament in his bid to secure Craig and Lindsay Foreman's freedom.
Speaking ahead of a Nato summit, the president says US negotiators can keep talking with the Iranians "if they want".
Iran subsequently targets US military sites in Bahrain and Kuwait, accusing the US of violating an agreement to end the war which was signed last month.
The US Central Command says the strikes are intended to impose "heavy costs" on Iran.
The family say they are "desperately worried" for Craig and Lindsay Foreman who are "starving".
Three days of public mourning in Tehran was a political spectacle Iran's leaders wanted the world to see, writes the BBC's international correspondent Lyse Doucet.
Many people were waving Iranian flags and red banners symbolising vengeance for the former supreme leader's war death.
The late ayatollah was killed in US-Israeli air strikes in February - his funeral began on Friday, with events planned across Iran and Iraq over the coming week.
Ali Khamenei's son Mojtaba is conspicuously absent from his father's funeral on Sunday, amid speculation about his condition.
Khamenei's funeral is another reminder of the change Iran has seen, but what does its new leadership want?
Ali Khamenei's body will lie in state in Tehran's Grand Mosalla until Monday, before travelling across Iran and Iraq.