Iran's foreign minister on Friday sharply rejected an Israeli allegation that Tehran tried to ship missiles to the Hamas-run Gaza Strip, calling it a "lie".
Israel has said it captured a Gaza-bound ship Wednesday carrying dozens of Syrian-made rockets "capable of striking anywhere in Israel".
The raid coincided with a high-profile US trip by Prime Minister Benjamin Netanyahu, who met with President Barack Obama for discussions on a Middle East peace deal.
"Netanyahu is in Washington... and all of a sudden as a godsend, they capture a ship from Iran with missiles. Just a coincidence?" Iranian Foreign Minister Mohammad Javad Zarif said during an official visit to Jakarta.
"If Netanyahu is a saint and can produce miracles I believe the Israelis themselves will be amused by that," he said.
"So if you cannot believe in miracles by Netanyahu, the only thing that you can believe is that this is a lie. And it is a lie."
The Israeli raid targeted a Panamanian-flagged ship in the Red Sea between Eritrea and Sudan.
"For the arms to go through Sudan and from Sudan back to somewhere and from that somewhere to Gaza -- this is more like delusional thinking rather than even serious propaganda," he said.
During a visit to Los Angeles on Thursday, Netanyahu compared Iran's leadership to Adolf Hitler.
"He called then for the destruction of Israel and Iran today calls for the destruction of Israel," Netanyahu said.
"We shall not allow Iran to arm itself with the capability to destroy us."
Iran, Russia, China, France, Germany, Britain and the United States met in Geneva on Wednesday for three days of negotiations on a decade-long dispute over Tehran's nuclear energy programme.
The United States, other Western powers and Israel have long suspected Iran of using its civil nuclear energy programme as a cover for developing atomic weapons, a charge denied by Tehran.
Iran in recent talks agreed to roll back on its programme in return for an easing of sanctions.
Talks aimed at reaching a comprehensive and permanent deal are to begin in New York next month.