Confusion swirled over a possible breakthrough in the tanker standoff in the Middle East on Tuesday after Gibraltar scotched Iranian media reports that an Iranian tanker was due to be released.

The Fars news agency said that Grace 1, seized by British Royal Marines off Gibraltar on suspicion that it was taking 2.1m barrels of oil to Syria in breach of an EU arms embargo, was going to be released on Tuesday evening. The report cited Gibraltar authorities, but a source for the government of the British Mediterranean territory told Reuters it was not correct.

The seizure of the boat on 4 July led to reprisals by Iran, including the capture of the British-flagged Stena Impero. Both incidents fuelled worsening hostilities between Iran and the west that began when Washington pulled out of an international agreement curbing Iran’s nuclear programme last year and reimposed economic sanctions.

A court in Gibraltar is to decide the fate of the ship on Thursday, when an order for its detention lapses.

Britain had said there would be serious consequences if Iran did not release the British-flagged tanker, and behind the scenes there have been negotiations on how to resolve the dual crisis. Formally, the Foreign Office and Iran say there is no link between the two boat seizures. On Tuesday the Foreign Office said the ship’s status was a matter for Gibraltar.

The Stena Impero’s owners have said its 23 personnel on board have been properly treated by the Iranians since their capture.

The initial British capture of Grace 1 was always regarded as controversial, both politically and legally.

The Foreign Office faced private criticism that its decision to back a move to enforce EU sanctions in such a novel way was always likely to lead to an Iranian reaction just as the Iran nuclear deal was coming under such pressure. Iran, responding to the mounting US economic sanctions, has withdrawn from aspects of the nuclear deal covering the limits on enriching uranium and its stockpiles of uranium.

It was the first time the UK had enforced the EU embargo on oil sales to Syria in this way.

The UK acknowledged it had acted after pressure from the US, including intelligence that the boat was carrying oil bound for the regime of President Assad. It was also a surprise to the UK that Grace 1 strayed from international into Gibraltarian waters, so making the capture of the ship possible.

There have also been legal question marks over whether the seizure was compliant with international law, since Iran was not subject to the EU-imposed embargo, but many experts said the port to which the ship was bound was a sanctioned entity, and therefore the UK act was lawful under EU law.

Talks between Iranian officials and the Foreign Office conducted in London last month failed to resolve the crisis after the UK demanded assurances that the ship’s cargo would not proceed to Syria. Iran insisted that it had a right to sell oil to Syria or any other country it wished.

The US has separately threatened to impose sanctions on any country that imports oil from Iran. Oil exports are vital to the Iranian economy and it has responded to the growing stranglehold by taking a more aggressive posture on the Strait of Hormuz, the waterway that Iran regards as its preserve.

If the breakthrough does happen, it will change some of the atmosphere around the nuclear deal ahead of the G7 summit of world economic powers in Biarritz at the end of the month. The rival European and US approaches to the Iranian regime are likely to be central to the summit.



