Just in case there was any ambiguity about Iran's missile test today in the Hormuz Straits, the air force chief, General Hossein Salami, put any lingering uncertainty to rest.

Salami said the tests of long- and medium- range missiles were intended to demonstrate Iranian resolve "against enemies who in recent weeks have threatened Iran with a harsh language".

There is no question that the principal enemy the Iranian government has in mind is Israel. Israel is within range of the Shahab 3 missile, one of the weapons tested today. And Israel is the only country currently employing "harsh language" about Iran.

George Bush repeatedly says "all options are on the table" but that diplomacy is his administration's favoured approach. Israeli officials, by contrast, have said explicitly they would carry out air strikes to prevent Iran building nuclear weapons. Shaul Mofaz, a cabinet minister and former army chief, has said Israel would have "no choice" but to carry out an attack.

The EU foreign policy chief, Javier Solana, is due back in Tehran soon to discuss a proposed deal offering economic, energy and diplomatic incentives in return for suspension of uranium enrichment. The signs so far are not good. Iran's initial response appears to have been a polemic that ignored the issue of suspension.

Israel has always believed that negotiations with Iran were doomed to failure and that the ruling clerics had made a strategic decision to go nuclear which they would not abandon.

Israeli officials had hoped the Bush administration would take action, but they now have doubts and are considering their own unilateral military options.

Those options are limited. Israeli planes would have to fly a long way to reach their targets, presuming Jordan would not give its approval for overflights. The strikes would be aimed at deeply buried targets, with no certainty that all Iran's nuclear facilities are known to Israeli intelligence. The strikes could spur Iran's nuclear ambitions while failing to hobble them.

But Israel's government believes it has no choice but to strike in the hope of slowing down the programme, even if it has to strike again and again to keep it in check. It is derisive about Iran's claims to be pursuing a purely peaceful energy generation scheme, seeing Tehran's nuclear ambitions as an existential threat and for that reason, a government adviser said recently, the standards of proof are lower.

"While your intelligence has to be 90% sure before handing the decision to the policy-makers for action, our intelligence only has to be 70% sure," the advisor said.

He added that the Israeli public might forgive a botched mission, but would never forgive inaction in the face of such a perceived mortal threat. If the Iranian nuclear programme continues at the present pace, he said, a decision would have to be made in the next year to 18 months.

The Iranian response has been to underline its deterrent with events like today's missile test and heightened rhetoric. Ali Shirazi, an aide to Iran's Supreme Leader, said Tel Aviv would "burn" if Iran was attacked.

It would not be a limited war. Iranian officials have said that they would automatically presume an Israeli strike was western-backed and retaliate accordingly. Shirazi said the US fleet in the Persian Gulf would also be hit. In the past the Iranians have threatened asymmetric warfare using small boats and suicide bombers against much larger ships. It is a fair bet that shipping in the Straits of Hormuz – through which 40% of the world's oil passes - would either be blocked or seriously squeezed. Attacks on US and British troops could also be stepped up through proxies and allies in Iraq and Afghanistan. US military intervention would be unavoidable.

The sabres being rattled across the Persian Gulf right now are very real and very dangerous.