The minister for defence people and veterans said that the Royal Navy is too small to continue to play a role on the international stage.
Speaking to Sky News, Tobias Ellwood denied that the UK had "taken its eye off the ball" and said with UK vessels going through 100 nautical miles of waterway every day it is "impossible to simply escort each individual vessel".
He also called for more money to be invested in defence: "If we want to continue playing a role on the international stage, bearing in mind that threats are changing, all happening just beneath the threshold of all-out war, then we must invest more in our defence, including our Royal Navy.
"Our Royal Navy is too small to manage our interests across the globe if that's our future intentions and that's something the next prime minister will need to recognise."
The statement comes after a British-operated oil tanker, the Stena Impero, was seized by the Iranian Revolutionary Guard in the Persian Gulf for "violating international maritime rules".
Listen: audio footage has emerged between Iranian authorities and HMS Montrose
Tobias Ellwood also said that sanctions for Iran were not off the table: "COBRA was taking place yesterday, so we're looking at the operational responsibilities from that but, yes, we are going to be looking at a series of options."
Shadow Justice Secretary Richard Burgon has also warned that a war with Iran could be even worse than the war in Iraq.
Also speaking to Sky News, he said: "If we end up in a conflict backed by Donald Trump then I think it would not only be comparable with Iraq, in fact, it could be even worse than Iraq, and that should really scare everybody.
"We need sensible negotiations. We've got a really important part to play diplomatically in this. We can use our negotiating weight.
"I think that our Government has international respect and this country has international respect in a way that Donald Trump doesn't.
"I think we need to use that for the purposes of conflict resolution and for the purposes of making sure this doesn't escalate out of control."