The US is keen to sign a free trade agreement (FTA) with Iceland, although this may be more for geopolitical reasons than economic purposes.

This is according to a source at news provider Axios, who said she had asked representatives attending a US Senate Republican Party lunch last month whether they would be pushing forward with a trade agreement.

She claims to have heard Senator John Kennedy strongly encourage the administration to go ahead with a deal with the Nordic nation, while Alaskan representative Lisa Murkowski reportedly then said she would be in support of this.

The source also said several other senators had suggested they would be open to an Icelandic FTA, with vice president Mike Pence saying a working group is currently exploring the potential of such a deal.

Mr Pence has already made a state visit to Iceland this year, as has secretary of state Mike Pompeo, leading to speculation that the US is trying to forge stronger ties there.

This is linked to part of the country's global competition and trade wars with China, which has also expressed an interest in parts of the Arctic.

Mr Pence startled Icelandic officials earlier this year by thanking them for not participating in the Chinese government's Belt and Road initiative, which it sees as a method of gaining geopolitical influence.