Iraq's oil ministry on Sunday denied an Iranian claim that it had seized an Iraqi oil tanker in the Gulf, Reuters reported, citing the Iraqi News Agency.
"The ministry does not export diesel to the international market," the ministry said in a statement.
The Iranian Revolutionary Guards had said earlier that a tanker it seized for allegedly smuggling fuel was an Iraqi ship, the official IRNA news agency reported.
They claimed the tanker in the Gulf which they said was smuggling fuel and detained seven crewmen.
The vessel was intercepted near Iran's Farsi Island in the Gulf, Iran's semi-official Fars news agency said. The elite Revolutionary Guards Corps (IRGC) has a navy base on Farsi Island which is located north of the Strait of Hormuz.
"The IRGC's naval forces have seized a foreign oil tanker in the Persian Gulf that was smuggling fuel for some Arab countries," the Guards commander Ramezan Zirahi told state TV.
Zirahi added the tanker was carrying 700,000 liters of fuel, without elaborating on the nationalities of the detained crewmen.
The incident is the latest in a series of similar incidents in the Gulf in recent weeks.
The UK and Gibraltar seized the Iran-flagged tanker Grace 1 in early July. British authorities said the tanker was attempting to transport oil to Syria, a violation of EU sanctions.
Iran, in turn, seized the British-flagged Stena Impero a week later. However, Iranian Foreign Minister Mohammad Javad Zarif denied the move was an act of revenge for the capture of the Iranian tanker, claiming Iran had taken measures against the ship to implement international law.