On January 6, the Panama-registered oil tanker SANCHI collided with Hong Kong-registered bulk freighter CF Crystal about 160 nautical miles east of the Yangtze River estuary, causing a large fire on the SANCHI.
The stricken tanker, Sanchi, had drifted into Japan's exclusive economic zone and "suddenly ignited", reports said.
The ship later sank, the official news agency Xinhua cited the State Oceanic Administration as saying. The tanker was carrying a cargo of almost 1 million barrels of condensate, a type of gassy, ultra-light oil that readily evaporates or burns off in a fire, reducing the chance of a major oil spill. Previously, rescuers had found the bodies of two sailors from the Iranian tanker SANCHI. A third body had been recovered earlier in the waters nearby, Press TV said.
It remains unclear if there has been a significant oil leak into the sea.
The crew was all Iranian expect for two Bangladeshis.
"There is no hope of finding survivors among the members of the crew", Mohammad Rastad, spokesman for the Iranian rescue team dispatched to Shanghai, told Iran's state broadcaster in Tehran before the tanker went down.
The Chinese freighter had 21 crew members, all of whom were reported safe.