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An Iranian flag flutters in front of the UN headquarters Reuters

Iran held naval drills at the mouth of the Gulf and Indian Ocean on Sunday, (26 February) according to a navy commander. Tensions with the United States rose after Iran fired a ballistic missile on 29 January, following which the US put Tehran on notice and vowed to get tough with the country.

Rear Admiral Habibollah Sayyari told state media that Iran's annual exercises will be held in Strait of Hormuz, Gulf of Oman, Bab el-Mandab and north of the Indian Ocean to thwart piracy and terrorism.

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According to state media, ships, submarines and helicopters will participate in the naval drills across a 2 million sq km area along with marines, who will show off their skills in Iran's southeastern coast.

Barrels of oil in their millions are transported everyday to the United States, Europe and Asia through the strait of Hormuz and Bab el-Mandab. The Fifth fleet of the US navy is based in the area and safeguards shipping lanes in the Gulf and other nearby waterways.

Warning shots were fired by a US Navy destroyer at four Iranian fast-attack vessels near strait of Hormuz last month after they came in at high speed. The vessels reportedly belonged to the Iranian Revolutionary Guards, which were not taking part in the war games.

The US earlier this month said "Iran has been put formally put on notice" and later slapped new sanctions on Tehran. Last week, an elite commander from the Iranian Revolutionary guard said that US should expect a slap in the face if it underestimates Tehran's defensive capabilities.