US asks Gibraltar to hold Iranian tanker in detention amid stand-off

The United States requested on Thursday that Gibraltar hold in detention an Iranian supertanker at the centre of a stand-off between Tehran and London that sparked tensions in the oil-rich Gulf.

The British overseas territory's Supreme Court was set to release the Grace 1, which is suspected of smuggling oil to Syria, when the US Justice department applied for the vessel to be seized.

The move was announced by attorney Joseph Triay and delayed the court decision on the vessel's fate.

Triay did not detail the basis for the US request other than as "mutual legal assistance".

"The US Department of Justice has applied to seize the Grace 1 on a number of allegations which are now being considered," a government spokesman said.

Chief Justice Anthony Dudley made clear that were it not for the US move, "the ship would have sailed".

The Gibraltar Supreme Court decision on the fate of the ship was adjourned until after four pm (14:00 GMT).

The captain and three officers from Grace 1, had their police bail lifted and were formally released without any charges, a Gibraltar government spokesman said.

The supertanker, carrying 2.1 million barrels of Iranian oil, was seized by Gibraltar police and British special forces, provoking a diplomatic crisis.

It was suspected of carrying oil to war-torn Syria in violation of separate EU and US sanctions.

Iranian authorities believe Britain detained the ship at the behest of the Trump administration.

Iran described Britain's actions as "piracy" and hit back seizing a British tanker, the Stena Impero, on July 19 in the strategic Strait of Hormuz -- the conduit for much of the world's crude -- for breaking "international maritime rules".

Tehran repeatedly called for the release of Grace 1, insisting it had been in international waters and not headed to Syria.

The capture of the tankers heightened frictions just as European nations scramble to try to save a landmark nuclear deal with the Islamic Republic after the US pulled out of the accord in May last year and started imposing sanctions on Iran.

Iran responded by suspending some of its commitments under the nuclear deal.

The situation threatened to spiral out of control with ships attacked, drones downed and oil tankers seized.

At the height of the crisis, Trump called off air strikes against Iran at the last minute in June after its forces shot down a US drone.

President Hassan Rouhani said on Tuesday that Iran favours talks with the US if it lifts sanctions against the Islamic republic.

"Peace for peace and oil for oil," he said. "You cannot say that you won't allow our oil to be exported.

"It cannot be that the Strait of Hormuz is free for you and the Strait of Gibraltar is not free for us.