Months of simmering violence between Israelis and Palestinians in East Jerusalem spread to Israeli Arab towns this weekend after police shot and killed a 22-year-old man in the Galilee town of Kufr Kana, apparently as he was running away.

In their original statements about the death on Friday night police said Kheir Hamdan was shot when he tried to stab an officer during an attempt to arrest him for allegedly throwing a stun grenade in the town, near Nazareth.

However, CCTV footage of the shooting shows Hamdan tried to strike a police car several times with an object in his hand – allegedly the knife – but officers were inside, with Hamdan posing no immediate threat to them. When a police officer opens the door, Hamdan is seen retreating. It is at this point he is shot.

Police can then be seen dragging the severely injured Hamdan along the ground and bundling him into their car without offering first aid or calling for assistance. He died several hours later.

The shooting provoked violent clashes in the town as residents accused officers of murdering Hamdan. Thousands took to the streets to protest, with many hurling rocks and firebombs at police. Clashes continued on Sunday.

The tensions add to those in Jerusalem, where Palestinians from the eastern part of the city have been clashing almost daily with police over access to a holy site.

Amid calls for protests in Israeli Arab towns and a general strike, Israeli police raised their alert to the second highest level of preparedness. The police’s internal investigations department is looking into the shooting to determine whether proper protocol was followed.

The Israeli prime minister, Binyamin Netanyahu, in comments before the weekly cabinet meeting on Sunday, said he has ordered officials to examine whether citizenship could be removed from those participating in demonstrations.

“Israel is a nation of law. Whoever violates the law will be punished severely. We will not tolerate demonstrations in the heart of our cities in which the flags of Hamas and Isis [Islamic State] are waved, where there are calls for the redemption of Palestine with blood and fire, basically calling for the destruction of Israel,” Netanyahu said. “The time has come to operate against these movements that want to destroy us.”

Prior to the meeting, Israel’s finance minister, Yair Lapid, urged the prime minister to temper the storm. “Members of the cabinet and members of the Knesset must focus on lowering the flames, not intensifying the flames,” Lapid said.