Israeli Prime Minister Benjamin Netanyahu accuses Iran of exploiting Egypt's political crisis by sending two warships through the Suez Canal.
Suez Canal officials in Egypt identify the ships as a frigate and a supply ship on their way to Syria.
Israel has been watching events in Egypt with concern over the stability of a country that has been the closest thing it has to an ally in a region where it is surrounded by enemies.
Speaking at a weekly Cabinet meeting, Israeli Prime Minister Benjamin Netanyahu accused Iran of trying to exploit the situation in Egypt to try to expand its influence by sending the warships through the Suez Canal.
Netanyahu said Israel views this Iranian move with utmost gravity. He said this step, like other steps and developments, underscores what he has reiterated in recent years, that Israel's security needs will grow and the defense budget must grow accordingly.
Bar Ilan University's Begin Sadat Center for Strategic Studies Director Efraim Inbar says Iran's decision to send ships to the Mediterranean is part of its strategy to bring about a greater Iranian presence in the region.
"It is already well entrenched in Syria and in Lebanon and it is trying to build a Shiite corridor from Iran to the Mediterranean."
Israel believes Iran has a foothold in the Gaza Strip as a supporter of Hamas, the Islamist group that controls the Palestinian seaside enclave.
Israel is concerned about the ships' presence in the Suez Canal, but has not indicated it will take any action against the vessels. Inbar says Israeli leaders are, for now, only keeping an eye on the Iranian maneuvers.
"Basically, we have to observe carefully what the Iranians are doing. Their naval presence is not changing the neighborhood balance of power so far in the Eastern Mediterranean. It has more a political character, rather than military significance," says Inbar.
The ships were not expected to enter Israeli territorial waters.