The Stena Impero ship (Picture: Stena Bulk).
The Government said it remains "deeply concerned" by the "unacceptable" seizure of a British-flagged oil tanker by Iranian authorities in the Persian Gulf.
On Friday night, Iran's Revolutionary Guards Corps announced it had seized the Stena Impero in the strategic Strait of Hormuz "for failing to respect international maritime rules".
It also said that "after being confiscated, the tanker was led to the shore and handed over to the Ports and Maritime Organisation for legal procedures and the required investigations".
However, since then Iran's Guardian Council has said that the seizure of a British-flagged oil tanker was in response to Britain's role in seizing an Iranian tanker earlier this month.
The Fars news agency has reported that council spokesman, Abbas Ali Kadkhodaei, said "the rule of reciprocal action is well-known in international law" and that the right decision in the face of an "illegitimate economic war and seizure of oil tankers" was made.
It is believed that the councils comments are a reflection of supreme leader Ayatollah Ali Khamenei's views, who has final say on all state matters.
According to the Marine Traffic website, the 183m-long ship left the United Arab Emirates on Friday and was bound for the port of Al Jubail in Saudi Arabia.
Initially, it was reported that a second tanker, the British-operated, Liberian-flagged Mesdar, was also captured.
However, its operator, Glasgow-based Norbulk Shipping UK, said communication had been re-established with the ship after it was boarded by armed guards at around 17:30 BST on Friday.
The Government's emergency committee Cobra met on Friday night to discuss the situation.
Foreign Secretary Jeremy Hunt warned there would be "serious consequences" if the situation was not resolved quickly.
Mr Hunt said he understood that there were no British citizens on board either ship.
"We will respond in a way that is considered but robust and we are absolutely clear that if this situation is not resolved quickly there will be serious consequences," he said.
Asked if he could rule out military intervention, Mr Hunt said: "We're not looking at military options, we're looking at a diplomatic way to resolve the situation, but we are very clear that it must be resolved.
"Freedom of navigation in the Gulf is absolutely essential. If that freedom of navigation is restricted, Iran is the biggest loser and so it is in their interest to resolve this situation as quickly as possible and we will do everything we can to do that."
He said the Stena Impero was surrounded by four vessels and a helicopter, and was heading into Iranian waters.
The second ship, the Mesdar, was surrounded by 10 speedboats, he said.
He said he had spoken to US secretary of state Mike Pompeo about the situation and had tried to speak to Iranian foreign minister Mohammad Javad Zarif, but he was on a plane.
Reacting to the latest events, US President Trump said: "The US will continue to work with our allies and partners to defend our security and interests against Iran's malign behaviour."
Stena Bulk, which owns the tanker, released a statement on Friday night saying that ship manager Northern Marine Management had lost contact with the crew of 23 after "unidentified small crafts and a helicopter" approached the vessel at around 16:00 BST.
The company said the tanker was in international waters at the time but now appeared to be heading north towards Iran.
Stena Bulk said: "There are 23 seafarers aboard. There have been no reported injuries and their safety is of primary concern to both owners and managers.
"The priority of both vessel owner Stena Bulk and ship manager Northern Marine Management is the safety and welfare of the crew.
"We are in close contact with UK government authorities."
A spokeswoman from the UK's Ministry of Defence said: "We are urgently seeking further information and assessing the situation following reports of an incident in the Gulf."