"Foreign forces can cause problems and insecurity for our people and for our region," Rouhani said before a military parade commemorating the Iran-Iraq war.

Rouhani also said Iran would present a peace plan to the United Nations within days.

"In this sensitive and important historical moment, we announce to our neighbours that we extend the hand of friendship and brotherhood to them," he said.

Rouhani and top military brass saluted as row after row of soldiers marched past them in tight formation, followed by an array of homegrown military hardware.

The parade showcased tanks, armoured vehicles, drones and missiles -- including the Khorramshahr, said to have a range of 2,000 kilometres (more than 1,200 miles).

Tensions between Iran and the US and its allies have threatened to boil over since May last year when President Donald Trump unilaterally withdrew from a 2015 nuclear deal and later began reimposing sanctions.

The tensions escalated in the wake of devastating September 14 attacks on Saudi oil installations that Washington and Riyadh have, to varying degrees, blamed on Tehran.

Following the attacks, which triggered a spike in global oil prices, Trump initially raised the possibility of a military response, saying the US was "locked and loaded".

Washington later expanded its long list of sanctions against Tehran, targeting its central bank, but Trump indicated he did not plan military action.

On Friday, Defence Secretary Mark Esper said the US was sending reinforcements to Saudi Arabia at "the kingdom's request", but noted they would be "defensive in nature".

- 'Stay away' -

Rouhani called on the foreign powers to "stay away" from the Gulf.

"If they're sincere, then they should not make our region the site of an arms race," he said.

"Your presence has always brought pain and misery... The farther you keep yourselves from our region and our nations, the more security there will be," he added.

"Our logic is the logic of a Persian Gulf whose security comes from within."

The annual military parade marks the start of the week commemorating Iran's 1980-1988 war with Iraq.

Among the new weaponry debuting at Sunday's parade was an upgraded warhead for the Khorramshahr ballistic missile, the Kaman 12 drone with a range of 1,000 kilometres and a mobile radar system capable of detecting landmines, local media reported.

Iran's Foreign Minister Mohammad Javad Zarif tweeted that Rouhani would announce details of the "Hormuz Peace Endeavour" at the UN General Assembly.

Rouhani is to travel to New York on Monday, a day before general debate kicks off at the UN gathering.

Tensions have flared in the Gulf since May, when Iran began reducing its commitments to the nuclear deal and the US said it was sending forces to waters near the Islamic republic in response to "indications of a credible threat".

The US deployed an aircraft carrier strike group and a bomber task force to the sensitive waterways, before sending B-52 bombers, an amphibious assault ship and a Patriot missile battery.

Following the deployments, commercial ships were mysteriously attacked, drones downed and oil tankers seized in Gulf waters.

- 'Act of war' -

Trump in June authorised a military strike after Iran shot down a US drone, only to call off the retaliation at the last moment.

The crisis deepened with the September 14 attacks on Saudi energy giant Aramco's Abqaiq processing plant and Khurais oilfield which halved the kingdom's crude output.

Yemen's Iran-backed Huthi rebels claimed responsibility, but the US says attacks involved cruise missiles from Iran and amounted to "an act of war".

Saudi Arabia, which has been bogged down in a five-year war in Yemen, has warned of "appropriate measures" once the source of the strikes is confirmed by a UN investigation.

The UN has welcomed a Huthi plan for a cessation of hostilities announced Friday, but Saudi Arabia was sceptical.

After months of rising tensions, Iran's semi-official news agency ISNA said Sunday a Swedish-owned oil tanker detained two months ago by Iranian forces would be released "soon".

But "the case regarding its legal violations is still open with Iran's judicial authorities," it quoted the head of the local maritime organisation as saying.