The Klos-C arms shipment seized by Israeli forces on March 5 may have been bound for Sinai rather than the Gaza Strip, a US official and two Middle East analysts told Reuters on Tuesday. Israel denied the report, with a Jerusalem official dismissing it as speculation.

The report cast doubt on Israel’s assertion that the Iranian cargo was bound for the Palestinian enclave to serve terror cells there, and said that Israel may have obfuscated its real destination in order to spare Egypt the humiliation of conceding the security unrest in the peninsula.

“Were the Israelis to say the rockets were going to Sinai, then they would also have had to say who in Sinai was going to receive the rockets,” one unnamed source said. The report stressed that the Middle East sources were not Israeli.

Israeli Naval commandos intercepted 40 M-302 missiles,181 122-mm mortars, and 400,000 7.62 caliber bullet in the arms cache on the Panamanian flagged ship in the Red Sea, off the coasts of Eritrea and Sudan.

The US official was quoted as saying that while the arsenal would ultimately serve terrorists in targeting Israel, the bulky M302 rockets would not have been able to avoid detection during their transfer to Gaza, and that it was therefore far more likely that Sinai was the intended destination.

“You look at those things and it’s obvious they couldn’t have been slipped into Gaza,” the official said. Furthermore, the long range of the M302s, at 160 kilometers (100 miles), would allow for rocket strikes of Jerusalem and Tel Aviv even from the Sinai, he was quoted as saying.

Regarding the mortars found on board the ship: The official said those were probably meant for Gaza, since “you can fit each of those in a backpack.” The 400,000 bullets may have been shipped for another unknown African buyer, he said.

But Israel stood by the assertion that the arms on the ship were bound for terror groups in the Strip. “We’re sure that it was headed for Gaza,” a government official told The Times of Israel on Tuesday evening, adding that the sources quoted by Reuters were presenting assessments without offering any proof to back up their claims.

Israel has hailed the discovery of the shipment as exposing Iranian efforts to support global terrorism, and repeatedly stressed that the arms cache was meant for Gaza.

Egyptian Army soldiers patrol in an armored vehicle backed by a helicopter gunship during a sweep through villages in in Sheikh Zuweyid, northern Sinai, Egypt, May 12, 2013 (photo credit: AP)

Egyptian Army soldiers patrol in an armored vehicle backed by a helicopter gunship during a sweep through villages in in Sheikh Zuweyid, northern Sinai, Egypt, May 12, 2013 (photo credit: AP)

“This operation thwarted a significant threat to Israeli citizens,” Defense Minister Moshe Ya’alon said after the shipment was seized. “Those missiles that have been uncovered would certainly have threatened millions of Israelis had they reached the Gaza Strip.”

“We prevented the transfer of weapons to Gaza and simultaneously exposed the truth about Iran,” IDF Chief of Staff Benny Gantz said.

While Israeli leaders point to the Gaza Strip as an obvious staging ground for terror, al-Qaeda-linked Islamist group Ansar Bayt al-Maqdis has been active in Sinai in past months, taking responsibility for a bus bombing in the Egyptian town of Taba that left four dead and 13 injured on February 17, for several Grad rockets launched at Eilat, and for blowing up a gas pipeline.

Some of the 40 rockets put on display by the IDF along the docks of the southern port of Eilat, Monday, March 10, 2014 (photo credit: AFP/Jack Guez)

Some of the 40 rockets put on display by the IDF along the docks of the southern port of Eilat, Monday, March 10, 2014 (photo credit: AFP/Jack Guez)

Ansar Bayt al-Maqdis is reportedly holed up in the mountainous center of the arid peninsula, an area that the Egyptian military since the toppling of Muslim Brotherhood president Mohammed Morsi has been loath to approach in its ongoing battle with terror groups in the increasingly turbulent territory.

The White House issued a condemnation of the Islamic Republic’s support for terror five days after the find, a delay denounced by Prime Minister Benjamin Netanyahu.

Iran has denied any connection with the arms shipment.

Netanyahu organized a large-scale exhibit of the findings and press conference in Eilat a few days after the operation, but the media blitz largely failed to impress the foreign journalists present at the event.

Times of Israel staff contributed to this report.