The British foreign secretary has urged Iran to reverse its "illegal" seizure of a British-flagged tanker in the Gulf.
Jeremy Hunt said it "raises very serious questions" about the security of British and international shipping in the Strait of Hormuz.
It comes as Iran released new footage of the capture on Friday of the Stena Impero.
Tehran said the vessel was "violating international maritime rules".
Speaking after a phone call with his Iranian counterpart, Mr Hunt said Iran viewed this as a "tit-for-tat situation" following the detention of an Iranian tanker in Gibraltar.
But he said "nothing could be further from the truth".
The Stena Impero's owners said they wanted access at the port of Bandar Abbas to the 23 crew members, who they said are in good health.
Masked Iranian forces dropped from helicopter
The Stena Impero was seized by the Iranian Revolutionary Guard on Friday in a key shipping route in the Gulf.
Footage emerged on Saturday appearing to show the moment the tanker was raided.
It was released by Iran's Revolutionary Guard-affiliated Fars news agency.
It shows masked forces dropping down ropes onto the ship from a helicopter after it was surrounded by high-speed vessels.
A Royal Navy frigate, HMS Montrose, was alerted and raced to intervene, as it did - successfully - with another British-flagged tanker just over a week ago.
But this time it was too far away to stop the Stena Impero being seized - the tanker was already in Iranian waters.
Iran's state-run IRNA news agency said the tanker was seized after it collided with a fishing boat and failed to respond to calls from the smaller craft.
But Mr Hunt said it was seized in Omani waters in "clear contravention of international law" and then forced to sail into Iran.
The Stena Impero's Swedish owners, Stena Bulk, said it had been fully complying with regulations and had been in international waters at the time.
It said the 23 crew members, who are Indian, Russian, Latvian and Filipino, were in good health.
A second British-owned Liberian-flagged tanker, the MV Mesdar, was also boarded by armed guards on the same day but was released.
It came after Royal Marines helped seize Iranian tanker Grace 1 off Gibraltar earlier this month, because of evidence it was carrying oil to Syria in breach of EU sanctions.
Iran described the incident as "piracy" but Mr Hunt said the Grace 1 was detained legally in Gibraltarian waters "totally within the law".
UK government summons Iranian diplomat
On Saturday, UK government ministers held an emergency meeting of Cobra and a senior Iranian diplomat was summoned to the Foreign Office in London.
Afterwards, Mr Hunt said MPs would be updated on Monday about what "further measures" the government would take, adding the threat level had been raised to the highest level of alert.
"Our priority continues to be to find a way to de-escalate the situation," he said.
A UK government spokeswoman said earlier it had advised UK shipping to stay out of the area.
What does Iran say?
Iran's foreign minister Javad Zarif tweeted that the UK "must cease being an accessory to #EconomicTerrorism of the US".
He said it was Iran that guarantees the security of the Gulf and the Strait of Hormuz.
"Unlike the piracy in the Strait of Gibraltar, our action in the Persian Gulf is to uphold international maritime rules," he said.
Abbasali Kadkhodaei, spokesman of the state watchdog the Guardian Council, said on Twitter that "the law of retaliation is a recognised concept in international law" shortly after the ship's seizure was announced.
What's the background to this?
The latest developments come amid a deterioration in relations between Iran and the UK and US.
Tensions between the US and Iran have risen sharply since April, when the US tightened sanctions it had reimposed on Iran after unilaterally withdrawing from a 2015 nuclear deal.
The US blamed Iran for attacks on tankers in the world's key shipping area since May - Tehran denies all the accusations.
On Friday, the US claimed to have destroyed an Iranian drone in the Gulf.
Unlike the US, the UK government remains committed to the nuclear deal, which curbs Iran's nuclear activities in return for the lifting of sanctions tensions.
However, the UK's decision to help seize the Iranian tanker Grace 1 off Gibraltar earlier this month infuriated Iran.
On Friday, Gibraltar granted a 30-day extension to allow authorities to continue detaining the tanker, which was suspected of carrying oil to Syria in breach of EU sanctions.
In retaliation for this seizure Iran had threatened to seize a British oil tanker.
A week later, Iranian boats attempted to impede a British oil tanker in the region before being warned off by a Royal Navy ship, according to the Ministry of Defence. Iran denied any attempted seizure.
A White House National Security Council spokesperson said the latest incident was the second time in just over a week the UK had been "the target of escalatory violence" by Iran.
US Central Command said it was developing a multinational maritime effort in response to the situation.
The US military said it wanted to promote maritime stability, ensure safe passage, and de-escalate tensions in international waters throughout the Arabian Gulf, Strait of Hormuz, the Bab el-Mandeb Strait and the Gulf of Oman.
The Pentagon has said US troops are being deployed to Saudi Arabia to defend American interests in the region from "emergent credible threats".
France and Germany called on the Iranian authorities to quickly release the Stena Impero.
Also calling for the release of the ship, the European Union's foreign affairs office, which represents 28 member states, expressed "deep concern" and urged for "restraint to avoid further tensions".