Tehran: A senior military adviser to Iran's Ayatollah Mojtaba Khamenei insulted US President Donald Trump and vowed to destroy Israel in remarks to state television on Wednesday, as their countries wage a war that has engulfed the Middle East.

"Trump is the most corrupt and stupid American president," Yahya Rahim Safavi said. "He is Satan himself."

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He also reiterated longstanding threats to eradicate Israel, which is fighting the Islamic republic alongside the United States.

"In the Middle East region, Israel and Iran cannot be together. One of them must remain. The one that remains is Iran and the one that is destroyed is definitely the Zionist regime," he said.

Iran threatens prolonged war

Iran warned it could wage a prolonged war with the United States and Israel that would "destroy" the world economy, even as US President Donald Trump said late Wednesday the Islamic republic was facing imminent defeat.

The defiance from Tehran came as fighting around the strategic Strait of Hormuz -- the waterway carrying a fifth of the world's oil -- sent shock waves through energy markets, prompting emergency releases from global reserves and a limited draw on US stockpiles.

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Oil prices have surged since February 28, when the United States and Israel launched air strikes on Iran that killed its supreme leader and plunged the Middle East into conflict.

Retaliatory Iranian missile strikes and drone attacks have brought shipping through the strait almost to a halt, forcing governments to scramble to contain the fallout, while Trump said Iran was "pretty much at the end of the line."

"Doesn't mean we're going to end it immediately, but they are," Trump told reporters.

He said Iran's navy and air force had been destroyed, that it was close to running out of missiles and that US forces could knock out the electricity supply "within one hour" -- leaving the country with a reconstruction that could take a generation.

But the US leader indicated that he would rather show restraint than take actions that would make it "almost impossible for them to rebuild their country."

The president had earlier said the United States must "finish the job" in Iran, adding that US forces had struck 28 Iranian mine-laying vessels.

He said Washington would tap US strategic reserves "a little" to help stabilise markets roiled by the war, and his administration later announced that he had authorized the release of 172 million barrels, beginning next week.

The International Energy Agency agreed to release a record 400 million barrels.

Israel's military, however, signalled the campaign was far from finished, and that it still had "a broad bank of targets." (AFP)