Iran said three drones caused an explosion at an ammunition factory in the city of Isfahan late Saturday, amid fresh tensions with the West and Israel over Tehran’s military involvement in Ukraine and stalled negotiations to revive an international accord that limits Iran’s nuclear activities.

Phone footage captured by several passersby in Isfahan and posted on social media showed what appeared to be a large explosion on the side of a building on a major street.

“At around 23:30, an unsuccessful attack using micro-aerial vehicles was carried out on one of the Defense Ministry’s workshops,” the Defense Ministry said in a statement, adding that one drone had been shot down by air defenses while two others had exploded. The ministry said the roof of one building had been slightly damaged, and that the explosion had caused no casualties.

A local crisis-management chief, Mansour Shisheforoush, told state media that residents had reported “abnormal sounds” in three or four parts of Imam Khomeini Street, a main thoroughfare leading to the city center.

Iranian authorities didn’t immediately assign blame for the blast.

Iranian media also reported a large fire had broken out at an oil refinery in an industrial area outside the western city of Tabriz. It wasn’t clear whether the two incidents were related.

The Isfahan blast comes amid growing tensions between Iran and the West following Tehran’s recent involvement in the war in Ukraine, where it has supplied Russia with armed drones.

Russia purchased last summer hundreds of Iranian Shahed and Mohajer series drones, which Moscow has used to attack Ukraine’s front-line positions and civilian infrastructure, as the two countries move toward what the U.S. has called a full defense partnership.

The purported attack in Isfahan also comes after months of domestic unrest. Nationwide protests erupted in September following the death in police custody of a young woman arrested for allegedly violating the country’s Islamic dress code. Street protests have abated in recent weeks, but discontent continues to simmer with sporadic rallies erupting.

Tensions also have grown over Iran’s nuclear activities. Talks to revive a 2015 nuclear accord that imposed limits on the country’s nuclear program in return for relief from U.S. sanctions stalled over the summer. They have been further complicated by Iran’s support for Russia in the Ukraine war.

Israel was against the accord, which the U.S. exited under Trump administration in 2018, and it has indicated it would take action against Tehran’s nuclear program if the West doesn’t do enough to curb it.

Key Iranian facilities have been hit by sabotage multiple times in the past, including the Natanz nuclear facility in 2021. Iran has accused Israel of being behind the sabotage.

Israel has also previously targeted convoys suspected of smuggling Iranian weapons into Syria from Iraq.

Earlier this week, William Burns, director of the Central Intelligence Agency, arrived in Israel ahead of Secretary of State Antony Blinken ‘s scheduled visit on Monday, according to a U.S. official. Mr. Blinken will visit Israel and the West Bank as part of a regional tour to meet Israeli and Palestinian leaders amid a recent flare-up in violence there, and to reiterate U.S. support for a two-state solution.

The 2021 sabotage at Natanz, which led to a steep drop in Iran’s nuclear fuel production, happened as U.S. Defense Secretary Lloyd Austin was visiting Israel and preparing to meet with Prime Minister Benjamin Netanyahu.

—Dion Nissenbaum contributed to this article.

Write to Sune Engel Rasmussen at sune.rasmussen@wsj.com