An attack on a bar in Mexico's Gulf coast city of Coatzacoalcos killed 26 people and injured about a dozen, according to officials on Wednesday who also said it was apparently overseen by a man who had been recently arrested but released.

"The criminals went in, closed the doors, the emergency exits and set fire to the place," President Andres Manuel Lopez Obrador said at his daily morning news conference.

Veracruz state police said the Tuesday night attack targeted the Bar Caballo Blanco, though the bar's name was in English on a sign outside: The White Horse Nightclub. It advertised private rooms for $7.50 "all night," "sexy girls" and a pole dance contest.

It is located just off a busy commercial street in Coatzacoalcos, a city with a longtime main industry involving oil and oil refining.

"This is the most inhuman thing possible," Lopez Obrador said about the attack.

"It is regrettable that organized crime acts in this manner. It is more regrettable that there may be collusion with authorities."

Lopez Obrador said local prosecutors should be investigated because "the alleged perpetrators had been arrested, but they were freed."

Officials eye a suspect

Veracruz Gov. Cuitlahuac Garcia suggested a gang dispute was linked to the attack.

Garcia identified the chief suspect as a man known as La Loca, and gave his name as Ricardo N. because officials no longer provide the full names of suspects.

Garcia said the man had been detained in July, but was released after being turned over to the state prosecutor's office.

"In Veracruz, criminal gangs are no longer tolerated," Garcia wrote of the attack, adding that police, the armed forces and newly formed National Guard are searching for the attackers.

People gather to console each other outside the bar. Officials believe the attack stemmed from a gang dispute. (Angel Hernadez/AFP/Getty Images)

In an interview with Milenio TV, Garcia said 23 people had died in the bar and three more had succumbed to their injuries afterward. He said some of the remaining injured were in "very serious" condition and he left open the possibility the toll could rise.

"It was a planned, cunning attack against that bar and the people who were inside."

He said businesses in the city have suffered similar fires and arrests were made, but state prosecutors didn't act.

Anti-crime activist and businessman Raul Ojeda said the attack had all the hallmarks of an unmet demand for extortion payments.

"They have been threatening all the businesses like that," Ojeda said. "The ones that don't pay close down or pay the consequences, as in this case."

He said the Zetas, Jalisco New Generation cartel and other local gangs are currently fighting for control of the city.

Photos of the scene showed tables and chairs jumbled around, with the bodies of semi-nude women lying amid the debris.

Prosecutors initially said the fire killed eight women and 15 men, and injured 13 people. Lopez Obrador said the death toll had risen to 25, but did not specify the gender of the victims.

Attack comes 8 years after deadly casino fire

The attack came almost eight years to the day a fire in 2011 at a casino in the northern city of Monterrey killed 52 people. The Zetas drug cartel staged that attack to enforce demands for protection payments.

The Zetas, now splintered, have also been active in Coatzacoalcos.

The attack, along with the killing of 19 people in the western city of Uruapan earlier this month, is likely to renew fears that the public, theatrical violence of the 2006-2012 drug war has returned.