Israeli prime minister Naftali Bennett accused Iran for its involvement in a deadly tanker attack off Oman and called Tehran’s accusations baseless.
Two crew members died when the MV Mercer Street, operated by an Israeli-owned firm, was attacked on Thursday.
Mr Bennett warned “we know how to send a message to Iran”, while Tehran said it would “not hesitate to defend its interests”.
There have been several recent attacks on Israeli- and Iranian-operated ships.
The attacks since March have been seen as tit-for-tat incidents.
A British security guard and a Romanian crew member died on the Zodiac Maritime-operated vessel, with the US pointing to a drone attack.
Mr Bennett told a cabinet meeting on Sunday intelligence evidence existed that Iran had carried out the attack.
He called on the international community to make it clear that Iran had “made a serious mistake”.
Iran’s foreign ministry spokesman, Saeed Khatibzadeh, told reporters Israel “must stop such baseless accusations”.
He said of the allegations: “Whoever sows the wind reaps the whirlwind.”
“We believe this attack was deliberate, targeted, and a clear violation of international law by Iran,” Mr Raab said in a statement.
“UK assessments have concluded that it is highly likely that Iran attacked the MV Mercer Street in international waters off Oman on 29 July using one or more Unmanned Aerial Vehicles (UAVs).”
At the time of the incident, the vessel was travelling from Tanzania to the United Arab Emirates, with no cargo aboard.
There has been a rise in tensions in the Gulf region since the United States reimposed sanctions on Iran in 2018 following former president Donald Trump’s withdrawal from the 2015 nuclear agreement, Joint Comprehensive Plan of Action (JCPOA).
Over the past few months several vessels have come under attack.