Iran is at a crossroads in its relationship with the rest of the world, Dominic Raab said as the fallout continued from the fatal attack on the oil tanker Mercer Street.

The drone attack on the ship killed British army veteran Adrian Underwood, who was providing security for the vessel, with Tehran being blamed by the UK.

The Foreign Secretary said the door was ajar for talks with Iran, but warned the country would be held to account for the attack on the ship off the coast of Oman.

With the inauguration of new president Ebrahim Raisi, Mr Raab said Iran had a choice to make.

“We know this is a crossroads moment for Iran. There’s a new president that’s inaugurated this week.

“And there’s a crossroads set of opportunities: if they continue down the track of harrying or attacking ships and shipping in the Middle East, if they continued destabilising activities through their proxies, if they continue to roll back from their nuclear commitments under the JCPOA (Joint Comprehensive Plan of Action) and if they continue to take arbitrary detainees, as we’ve had with Nazanin Zaghari-Ratcliffe, Anoosheh Ashoori, Morad Tahbaz, we will apply costs and we will hold them to account.

“Equally the door is always ajar, as we demonstrated over the last two years, for diplomacy and a better path forward.

“But we cannot have incidents like the attack off the coast of Oman without Iran being held to account.”

The attack on the Mercer Street oil tanker on July 29 killed Mr Underwood, who was named by security firm Ambrey, and a Romanian national reported to be the ship’s captain.

The Metropolitan Police said its Counter Terrorism Command is working to support the UK Coroner’s Office to establish the circumstances of Mr Underwood’s death.

Ambrey’s managing director John Thompson said: “Although the formal identification process is still under way, it is with enormous sadness that we announce that the British national killed in the security incident onboard the M/T Mercer Street vessel was Adrian Underwood.

“Adrian was a former soldier in the British Army with a distinguished record of service.

“He came to work for Ambrey in 2020 and his qualities were quickly recognised as he was rapidly promoted from maritime security officer to team leader.

“We continue to be in contact with Adrian’s family to offer support at this sad and difficult time and we request their privacy is respected. I know that Adrian will be much missed by everyone he worked with.”

The Met said: “The Metropolitan Police’s Counter Terrorism Command are working in support of the UK Coroner’s Office to establish the circumstances of the death of the UK national.

“The officers will gather evidence to support the coroner in establishing who the deceased was and where, when and how the death occurred.”

Mr Raab discussed the situation with US Secretary of State Antony Blinken on Wednesday.

US State Department spokesman Ned Price said the pair discussed “ongoing efforts to forge a co-ordinated response to Iran’s attack on the Mercer Street”.

Iran has denied responsibility for the incident.