Iran test-fired a surface-to-surface cruise missile Monday in a drill its navy chief said proved Tehran was in complete control of the strategic Strait of Hormuz, the passageway for one-sixth of the world's oil supply.

The 10-day naval maneuvers, which are scheduled to end Tuesday, were Iran's latest show of strength in the face of mounting international criticism over its nuclear program. Tehran has threatened to close the strait as possible retaliation to new U.S. economic sanctions.

The missile, called "Ghader," or "Capable" in Farsi, was described as an upgraded version of one that has been in service before. The official IRNA news agency said the missile "successfully hit its intended target" during the exercise.

An earlier version of the same cruise missile had a range of 200 kilometers and could travel at low altitudes. There were suggestions it could counter the U.S. naval presence in the Persian Gulf.

'We won't disrupt traffic through the Strait of Hormuz. We are not after this.'—Rear Admiral Mahmoud Mousavi, spokesman for Iran missile drill

There have been conflicting comments from Iranian officials over Tehran's intentions to close the Strait of Hormuz and U.S. warnings against such an ominous move.

"The Strait of Hormuz is completely under our control," Iran's navy chief Adm. Habibollah Sayyari said after Monday's test. "We do not allow any enemy to pose threats to our interests."

Israeli Defense Minister Ehud Barak said the Iranian exercise was a show of strength intended "to deter the world from continuing sanctions against it."

Barak said at a party meeting that he doubts Iran would close the strait because that would only bring harsher international sanctions.

Israel considers Iran an existential threat due to its nuclear and long-range missile program. Iran is also a major backer of Hamas and Hezbollah militants who are fighting Israel.

An Iranian long-range shore-to-sea missile called Qader (Capable) is launched during Velayat-90 war game on Sea of Oman's shore near the Strait of Hormuz in southern Iran on Jan. 2, 2012. Jamejamonline/Ebrahim Norouzi/Handout/Reuters

The West fears Iran's nuclear program aims to develop weapons —a charge Tehran denies, insisting it is for peaceful purposes only.

President Barack Obama has signed a bill that applies penalties against Iran's central bank in an effort to hamper Tehran's ability to fund its nuclear enrichment program, although the administration is looking to soften the impact of those penalties because of concerns that they could lead to a spike in global oil prices or cause economic hardship on U.S. allies that import petroleum from Iran.

The penalties do not go into effect for six months. The president can waive them for national security reasons or if the country with jurisdiction over the foreign financial institution has significantly reduced its purchases of Iranian oil.

The latest version of the Ghader missile was delivered in September to the naval division of Iran's Revolutionary Guard. At the time, Tehran said it is capable of destroying warships.

"In comparison with the previous version, the highly advanced Ghader missile system has been upgraded in terms of its radar, satellite communications, precision in target destruction, as well as range and radar-evading mechanism," said Rear Adm. Mahmoud Mousavi, a spokesman for the drill.

Range of hundreds of kilometres

State TV showed video depicting the launch of two missiles, which it said could hit targets hundreds of kilometers away. The broadcast said two more shorter-range missiles were also tested.

"We conducted the drill ... to let everybody know that Iran's defense and deterrence powers on the open seas and the Strait of Hormuz are aimed at defending our borders, resources and our nation," Sayyari said.

On Sunday, Iran test-fired an advanced surface-to-air missile called "Mehrab," or "Altar," which was described as a medium-range weapon.

Iran had said the sea maneuvers would cover a 2,000-kilometre stretch of water beyond the Strait of Hormuz at the mouth of the Persian Gulf, as well as parts of the Indian Ocean and the Gulf of Aden.

A leading Iranian lawmaker said Sunday the maneuvers served as practice for closing the strait if the West blocks Iran's oil sales. After top Iranian officials made the same threat a week ago, military commanders emphasized that Iran has no intention of blocking the waterway now.

Mousavi also emphasized Sunday that Iran has no plan to choke the strait.

"We won't disrupt traffic through the Strait of Hormuz. We are not after this," the semiofficial ISNA news agency quoted him as saying.

The drill was "tactical" and meant to show Iran was capable of assuming full control over the strait if needed, he said.