Iran's "provocative" plan to sail two warships through the Suez Canal into the Mediterranean have been canceled, an Egyptian official said.
The unnamed official was widely reported Thursday as saying the plans had been withdrawn, without giving a reason. He said the ships — a frigate and a supply vessel — were near the Saudi Red Sea port of Jeddah.
Oil prices had spiked Wednesday on news of a potential crossing.
Israel had reacted angrily to the plans, with Foreign Minister Avigdor Lieberman painting them as challenge to the West and warning that Jerusalem could not "forever ignore these provocations."
Lieberman said the vessels were planning on sailing to Syria — an arch enemy of Israel — though this has not been confirmed by Iranian authorities.
Israeli leaders have voiced concern that Iran may exploit the instability in the region following the Feb. 11 ousting of Egyptian President Hosni Mubarak and Jan. 14 overthrow of Tunisia's leadership. Iran cracked down on its own anti-government protest, on Feb. 14.
U.S. officials, however, played down the significance of the Suez crossing, which Iran announced weeks ago.
State Department spokesman P.J. Crowley acknowledged there were Iranian ships in the Red Sea, but said the U.S. didn't know their destination or intentions. Asked if the U.S. was tracking the ships' movements, Crowley said: "We always watch what Iran is doing."
Other U.S. officials said Iran was sending the ships through the Suez to provoke a reaction from the U.S. and Israel.
Comments by Lieberman at a closed meeting of American Jewish leaders in Jerusalem reportedly took Prime Minister Benjamin Netanyahu by surprise.
Defense Ministry officials had "preferred to ignore" the ships and that Lieberman had spoken out of turn, Yoav Limor, military affairs correspondent of the state-funded Channel One television, told The Wall Street Journal.
Lieberman said the plan proved "that the self-confidence and chutzpah of the Iranians are growing from day to day," according to a text issued later by his office. "To my regret, the international community is not showing readiness to deal with the recurring Iranian provocations. The international community must understand that Israel cannot forever ignore these provocations."
The prospect of an Iranian naval presence in the Mediterranean for the first time since Iran's Islamic Revolution of 1979 has been viewed by some in Israel as a sign of adversaries in the region becoming emboldened.
Iranian Navy officials have said the flotilla has embarked on a yearlong training mission from the Gulf of Aden to the Red Sea and through the Suez Canal into the Mediterranean Sea, according to the semi-official Fars News Agency, CNN reported.
Iranian Navy Cmdr. Rear Adm. Habibollah Sayyari reportedly said that cadets would be trained to protect ships and tankers under threat of attack from Somali pirates. Part of the mission was also to gather intelligence.
He added that the ships were in the region in "pursuit of a powerful [military] presence in the high seas and to consolidate our friendly ties and declare our message of peace and friendship to the regional countries."