Renewed fighting has broken out in the Gulf region, in the worst exchange of fire between the US and Iran since the two nations signed an interim deal in June.
US Central Command (Centcom) said on Tuesday it had launched "powerful" strikes in response to attacks on three oil tankers in the Strait of Hormuz, hitting more than 80 targets including air defence systems, coastal radar and fast boats.
On Wednesday, Iran said it had targeted US military sites in Bahrain and Kuwait in retaliation to the US attacks.
Oil prices ticked up following the strikes, with a barrel of Brent crude rising by more than 3% to $76 (£56.88).
Nato chief Mark Rutte described the American strikes on Iran as "absolutely necessary", speaking at the military alliance's summit in Ankara, Turkey.
"I think it was absolutely necessary," Rutte said, arguing that Iran was "basically violating the ceasefire" given what "happened yesterday with ships being attacked".
"I think it is totally crucial that the US forcefully [reacts]."
The US also said it had revoked its temporary suspension of sanctions on Iranian oil sales. Iran's speaker Mohammad Bagher Ghalibaf accused the US of breaching their Memorandum of Understanding (MoU) on this issue, and others, including the attacks in southern Iran and "violating Iranian adjustments in the Strait".
"The era of bullying and extortion is over. It leads nowhere. We don't fold," he said.
The USstrikes hit Qeshm island, Bandar Abbas and Sirik, Iranian state media reported, where people have been injured by shrapnel.
Missiles and drones were launched at "85 key US military facilities" in the two countries, including a US Navy headquarters and an air base in Kuwait, the Islamic Revolutionary Guard Corps (IRGC) said.
Iranian media reported the first casualty of the strikes, with IRNA stating: "Guardsman Mohammadreza Khazini was killed while confronting enemy drones after being struck by shrapnel from a projectile."
Kuwait has also responded to the Iranian strikes on its country, lambasting the "repeated attacks".
Talks on reaching a permanent deal have been on pause with funeral proceedings taking place for the late Ayatollah Ali Khamenei, killed on the first day of US-Israeli strikes on Iran.
Ceremonies are taking place in Iraq on Wednesday, with the final rites and burial set for Mashhad in north-east Iran on Thursday.
It is not clear when talks will resume after this latest round of strikes.
Earlier on Tuesday, Iran's deputy foreign minister described the US attacks as a violation of the US-Iran memorandum signed last month, and warned Tehran would "take decisive measures".
The US had said there would be consequences to what it has called the "wholly unacceptable" attacks on the three tankers.
Centcom said in addition to 60 small boats, it had struck Iranian missile launch sites and command centres. It did not give locations of its targets.
It said the strikes were"to impose heavy costs for targeting and attacking commercial shipping crewed by innocent individuals in an international waterway".
Before the strikes, the US Treasury revoked a waiver that had temporarily lifted oil sanctions on Iran, and was part of the memorandum of understanding signed by Washington and Tehran last month.
Iran's foreign ministry called the move a breach of the memorandum and said it proved the "bad faith, inconsistency, and unreliability" of the US government.
It added that Tehran "will take whatever measures it considers necessary to safeguard its national interests and national security".