Iran has test fired a new medium-range missile capable of avoiding radar detection, raising the stakes in its defiance of the West.
The launch was part of a 10-day military exercise being conducted in the Gulf near the Strait of Hormuz.
The drill is taking place as the country's relationship with the West is under increasing strain over its nuclear ambitions.
It's equipped with state-of-the-art technology and a built-in system that enables it to thwart jammers.
Exercise spokesman Rear Admiral Mahmoud Mousavi told State TV the missile that was tested is one of the newest in the Navy's arsenal.
"It's equipped with state-of-the-art technology and a built-in system that enables it to thwart jammers," he said.
He denied claims the latest sea manoeuvres serve as practice for closing the vital waterway - as threatened by Iranian officials last week if the West blocks Iran's oil sales.
The Strait is the passageway for one-sixth of the world's oil supply.
The missile test comes a day after the US slapped new sanctions on financial institutions in Tehran for its controversial atomic programme.
The West fears Iran is secretly trying to develop atomic weapons - an allegation that Tehran denies.
As the diplomatic skirmishing continues, Iranian scientists have produced what they say is the nation's first nuclear fuel rod.
The announcement came after Iran said it was forced to make its own fuel rods since international sanctions banned it from buying them on foreign markets.
Nuclear fuel rods contain pellets of enriched uranium that provide fuel for nuclear