British Royal Marines stopped and seized the vessel off the shore of Gibraltar on suspicion it carried Iranian crude oil to Syria in breach of European Union sanctions against the government of Syrian President Bashar al-Assad.
Meanwhile, Gibraltar also announced on Tuesday August 13 that it is seeking to de-escalate tensions arising from the of the Iranian supertanker, adding that the current detention order ends Saturday night.
Iran said on Tuesday that Britain might free its oil tanker Grace 1 soon, after some documents were exchanged that would help the seized ship's release.
"The vessel was seized based on false allegations.it has not been freed yet".
A source for the government of Gibraltar denied those reports while Britain said investigations into the tanker were a matter for its Mediterranean territory.
Quoting Gibraltar authorities, the semi-official FARS news agency said the ship will be released by Tuesday evening.
Two weeks after the capture of the Iranian tanker, Iran's Revolutionary Guards seized a British tanker, Stena Impero, near the Strait of Hormuz, accusing it of marine violations.
The tankers' affair has added to worsening hostilities since Washington pulled out of an worldwide agreement curbing Iran's nuclear programme and reimposed economic sanctions.
The Iranian capture of the Stena Impero drew condemnation from Britain and other European parties to the nuclear deal that have been trying to salvage it by shielding Iran's economy from reimposed and toughened USA sanctions.
Iran's Foreign Ministry has summoned the British envoy to Tehran several times in protest at the United Kingdom navy's move.
Millions of barrels of oil pass daily through the various bottlenecks from Middle East oil producers to markets across the globe.