Britain’s territory Gibraltar has decided to free a seized Iranian oil tanker, but did not immediately indicate when the ship would set sail after the US launched a new, last-minute legal bid to hold it.

The Grace 1 was seized by British Royal Marine commandos in darkness off the coast of the territory at the western mouth of the Mediterranean on July 4 on suspicion of violating EU sanctions by taking oil to Syria.

Two weeks later, Iran seized a British-flagged tanker in the Strait of Hormuz leading into the Gulf.

The two tankers have become pawns in the stand-off between Iran and the West, their fate tangled up in the diplomatic differences between the EU’s big powers and the US.

Gibraltar Chief Minister Fabian Picardo decided to lift the detention order on Thursday after formal written assurances from Tehran that the ship would not discharge its 2.1 million barrels of oil in Syria.

“In light of the assurances we have received, there are no longer any reasonable grounds for the continued legal detention of the Grace 1 in order to ensure compliance with the EU Sanctions Regulation,” Mr Picardo said.

However, Gibraltar officials did not make clear whether the US legal bid would mean the ship would have to be detained further, or if so, for how long.

“Separately, the United States Department of Justice has requested that a new legal procedure for the detention of the vessel should be commenced,” Mr Picardo said.

“That is a matter for our independent Mutual Legal Assistance authorities who will make an objective, legal determination of that request for separate proceedings.”

Iran’s Foreign Minister Mohammad Javad Zarif characterised the US bid to prevent it from leaving as “piracy”.

Our London Embassy note to UKFCO:
-Protested the illegal detention of Grace1;
-Repeated public statements about destination; &
-Made it crystal clear that EU sanctions do NOT apply to Iran—a position shared by most Europeans.

Nothing changes the fact: detention was 100% unlawful pic.twitter.com/lwJ2gYKpf6

— Javad Zarif (@JZarif) August 15, 2019

Iran’s ambassador to London Hamid Baeidinejad said the Grace 1 would sail shortly.

“America desperately tried to block the release of the tanker at the last minute, but faced a miserable defeat,” Mr Baeidinejad said on Twitter.

“All preparations are done for the tanker to sail into open waters, and the vessel will soon leave Gibraltar.”

Britain’s foreign office said Iran must abide by its pledge that the ship would not sail for Syria.

There was “no comparison or linkage between Iran’s unacceptable and illegal seizure of, and attacks on, commercial shipping vessels in the Strait of Hormuz and the enforcement of EU Syria sanctions by the Government of Gibraltar,” it added in a statement.

-AAP