Israel's PM has said he knows "with certainty" Iran was involved in a deadly tanker attack off Oman, accusations Tehran called "baseless".
Two crew members died when the MV Mercer Street, operated by an Israeli-owned firm, was attacked on Thursday.
Israeli PM Naftali 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.
The BBC's security correspondent, Frank Gardner, says this undeclared shadow war - and its counter-denials - had been heating up, but the human casualties on the Mercer Street marked a significant escalation.
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."
However, UK Foreign Secretary Dominic Raab also blamed Iran.
"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)."
It comes against a backdrop of talks in Vienna that are trying to revive a 2015 international deal under which sanctions on Iran are lifted in return for commitments from Tehran to curb its nuclear programme.
Western countries accuse Iran of trying to build a nuclear bomb. Iran, in turn, denies this, insisting its nuclear programme is focused on research and power generation.