The article was published in the Swedish tabloid Aftonbladet this week.
The Swedish ambassador to Israel condemned the newspaper article as "shocking and appalling".
The government in Stockholm has not issued a similar condemnation, and Israeli foreign ministry officials have reacted furiously.
"It is regrettable that the Swedish foreign ministry does not intervene when it comes to a blood libel against Jews," Israeli Foreign Minister Avigdor Lieberman said.
"[This] reminds one of Sweden's conduct during World War II, when it also did not intervene."