The vessel was taken to Bushehr Port and its cargo turned over to the National Iranian Oil Product Distribution Company in Bushehr Province, according to the Fars news agency. The island sits in the Persian Gulf between Saudi Arabia and Iran, north of the Strait of Hormuz. It was unclear, however, why the ship would be transferring fuel to Arab gulf states, which are also major energy exporters.
Iran has previously accused ships of smuggling fuel.
Iranian official Abbas Araqchi told The Washington Post, in reference to the tanker detainment, "The countries who are part of [the nuclear deal] shouldn't create obstacles for the export of Iranian oil".
"All sanctions should be lifted so that there will be no criminals facing us", he said, accusing the USA of committing acts of "economic terrorism" for blocking food and medicine imports.
Two Iraqi port officials said initial information obtained show that the seized "small ship" is owned by a private shipping company which is owned by an Iraqi private trader.
Italy, Denmark and France have also said they would back the United Kingdom navy but they have yet to commit.
"America is responsible for tensions in the Persian Gulf, in the world", he said.
"If the United States really wants to hold dialogue, it should first of all lift all sanctions", Rouhani said in remarks on state television.
The incidents follow a string of attacks on petrochemical tankers in and around the strait in recent months, acts of sabotage the United States blamed on Iran.
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The House has sent two major election security bills to the Senate since Democrats regained the majority. McConnell dismissed the bills as "partisan" and their authors as promoters of a "conspiracy theory".
In June, Iran shot down an American surveillance drone in the Strait of Hormuz.
The US is acting alone against Tehran and its allies are too "ashamed" to join its forces in the Gulf, Iran's top diplomat said Monday, dismissing Washington's calls for talks as a sham.
Last month, Iran's Islamic Revolutionary Guard Corps seized a British tanker, Stena Impero, near the Strait of Hormuz for alleged marine violations.
Rouhani said "peace with Iran is the mother of all peace" and "war with Iran is the mother of all wars" as he defended a landmark 2015 nuclear deal between Tehran and world powers.
A British source said the focus of the new mission would be protecting the security of shipping and Britain would not be joining USA sanctions against Iran. Iran denies the ship was bound for Syria but has not disclosed its destination.
"Today the United States in alone in the world and can not create a coalition".
Tehran and Washington have been locked in a battle of nerves since a year ago when Trump withdrew the USA from a landmark 2015 deal placing curbs on Iran's nuclear program and began reimposing sanctions.
"It is completely appropriate for Australian ministers to take their time with this request from our United States ally", he said.
Maritime security around the Persian Gulf is of global importance.
"The murky secondary or black market for oil in and around the Strait of Hormuz is naturally an unregulated phenomenon", Dr Theodore Karasik, senior adviser to Gulf State Analytics in Washington, said.