Israel is "pillaging" the natural resources of the Dead Sea which lie in occupied Palestinian territory in violation of international law, a report which singles out the cosmetics firm Ahava for criticism.

According to the Palestinian human rights organisation al-Haq, the "appropriation and exploitation of Palestinian land and natural resources in the occupied Dead Sea area by Israeli settlers and companies … meet the requirements of the crime of pillage".

Its report, Pillage of the Dead Sea, says Israeli restrictions on planning and movement "have severely hampered the ability of Palestinians to use and access their land and other natural resources in the region. The presence of settlers who directly utilise and profit from the Dead Sea wealth has severely exacerbated this situation and contributed to the over-exploitation of the area, resulting in severe environmental damage."

Almost two-thirds of the western shore of the Dead Sea lies within the West Bank, which Israel has occupied since 1967. The remaining area is in Israel, and the eastern shore is in Jordan. At the lowest point on Earth, 410 metres below sea level, the inland sea is a magnet for tourists keen to float in its salt-saturated waters and for industries which extract its minerals.

Ahava Dead Sea Laboratories, which manufactures and markets beauty products based on Dead Sea minerals and mud, is located within the Israeli settlement of Mitzpe Shalem in the West Bank. It is licensed by the Israeli government to mine Dead Sea raw materials. According to al-Haq, almost 45% of its shares are owned by Mitzpe Shalem and another Israeli settlement on the Dead Sea shore, Kalia.

Within two decades of its launch in 1988, Ahava's annual global sales had reached almost $150m (£95m). The company has been the target of boycott campaigns by anti-settlement activists, which contributed to its decision to close its store in Covent Garden, London, a year ago.

The al-Haq report says Ahava is "unlawfully utilising the Palestinian natural resources of the Dead Sea area for its own economic profits and therefore can be considered directly responsible for the pillage of the occupied territory's natural resources in clear violation of customary international law".

However, in a letter circulated in 2010, Ahava said: "The mud and minerals used in Ahava's cosmetic products are not excavated in an occupied area. The minerals are mined in the Israeli part of the Dead Sea, which is undisputed internationally."

Ahava did not respond to a request for comment on the al-Haq report.

The land along the Dead Sea shore was classified as "Area C" in the 1993 Oslo accords, in which Israel has full military and administrative control. Much of the land has been declared or registered as "state land", which has "dispossessed Palestinians of extensive portions of the Dead Sea land, effectively depriving them of the possibility of benefiting from [its] natural resources," according to the report.

Al-Haq says "Israel is openly in violation of its obligations under international and humanitarian law as an occupying power … because it is encouraging and facilitating the exploitation of Palestinian natural resources and actively assisting their pillaging by private actors." It cites The Hague regulations and the statute of the international criminal court.

In a statement, the Israeli foreign ministry said that, under the Oslo accords, Israel had territorial jurisdiction that includes land, subsoil and territorial waters in Area C. It "therefore would be entitled to licence a company to excavate mud in that area if it chose to do so".

The al-Haq report calls on the European Union to adopt restrictions on the import of Israeli products originating from settlements, and urges cosmetic retailers to provide clear information about the origin of products they sell to allow consumers to make an informed choice about purchases.