Iran is demanding financial compensation from Ukraine over a July strike on an Iranian vessel in the Caspian Sea, rejecting Kyiv’s assertion that the ship was hit accidentally and warning that Tehran will pursue reparations if Ukraine refuses to pay.

The dispute centers on a vessel struck last month that Iran insists was carrying civilian cargo. Ukrainian officials, however, have alleged that the ship was transporting Iranian weapons or military components to Russia for use in its war against Ukraine, while President Volodymyr Zelensky has accused Tehran of providing Moscow with drone weaponry.

The incident occurred in the Caspian Sea on July 25, when Ukraine initially reported that drones had attacked two Russian vessels carrying “military cargo from Iran.”

Iran subsequently said that one of the vessels was Iranian and maintained that it was a civilian ship transporting iron from Russia to an Iranian port. According to Tehran, one crew member was killed and two others were wounded in the attack.

Iran reacted furiously, branding the strike a “hostile and criminal” act of “terrorism” and summoning Ukraine’s charge d’affaires in Tehran to deliver an official protest. Iranian officials also accused Kyiv of attempting to link the Russia-Ukraine war with the U.S.-Iran confrontation and draw European countries into that conflict.

Zelensky initially defended Ukraine’s actions while expanding his allegations about cooperation between Moscow and Tehran. He charged that Iran was supplying Russia with drone weapons while Russia, in return, was giving Tehran “active Russian satellite surveillance of the Gulf states and U.S. military facilities located there.”

“There is a clear correlation between Russia’s satellite imagery ⁠of these sites and Iranian strikes — both before the attacks, in preparation for them, and afterward, to assess the damage inflicted,” he said.

Ukraine’s ambassador to Israel, Yevgen Korniychuk, also disputed Iran’s description of the vessel as an ordinary commercial ship, claiming it had been transporting drone and missile components from Iran to Russia rather than civilian goods.

Several days after the strike, the New York Times reported on July 28 that Tehran had considered retaliating by firing a ballistic missile at a Ukrainian seaport. The contemplated strike was reportedly designed to “make a symbolic point but cause relatively little damage.”

Diplomatic intervention reportedly persuaded Iran not to proceed with the proposed missile attack, with Tehran being warned that a Ukrainian response could prove considerably more serious than Iranian officials anticipated. Some analysts in Ukraine also cautioned that Kyiv could ill afford to become involved in another confrontation while continuing to battle Russia’s invasion.

Iranian Foreign Minister Abbas Araghchi later spoke by telephone with Ukrainian Foreign Minister Andrii Sybiha, who told his Iranian counterpart that the attack on the cargo vessel had been “unintentional.” Sybiha had earlier rejected Araghchi’s allegations against Ukraine on social media, describing them as “Iranian lies.”

The dispute resurfaced on Aug. 10 when Tehran publicly rejected Kyiv’s explanation that the vessel had been struck by mistake and formally demanded compensation for the damage.

“We still believe that we have not been convinced by the Ukrainian side’s claim that this action was unintentional,” said Iranian Foreign Ministry spokesman Esmaeil Baqaei.

“They must certainly compensate us. Naturally, if they do not compensate us, we will seek compensation ourselves,” he said.

Iran’s ambassador to Russia, Kazem Jalali, said Wednesday that Kyiv has still not provided compensation for what Tehran continues to describe as an “act of terrorism,” although he indicated that “negotiations” over the matter remain underway.

Jalali also argued that responsibility should extend beyond Ukraine to the Western countries supporting Kyiv.

“Ukraine’s European and American supporters must also accept their responsibility for Kyiv’s actions and hold them accountable,” he added.