British ministers are making plans aimed at targeting Iran with sanctions in the aftermath of the Iranian seizure of a British-flagged oil tanker in the Gulf, the Daily Telegraph newspaper reported.
>> Read more: U.S.-Iran escalation on verge of turning into real slugfest | Analysis
Meanwhile, Britain told the United Nations Security Council on Saturday that the tanker seized by Iran was approached by Iranian forces when it was in Omani territorial waters and the action "constitutes illegal interference."
"The ship was exercising the lawful right of transit passage in an international strait as provided for under international law," Britain's UN mission wrote to the Security Council. "International law requires that the right of transit passage shall not be impeded, and therefore the Iranian action constitutes illegal interference."
The letter, seen by Reuters, was also sent to UN Secretary-General Antonio Guterres.
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Friday's action in the global oil trade's most important waterway has been viewed in the West as a major escalation after three months of confrontation that has already taken Iran and the United States to the brink of war.
It follows threats from Tehran to retaliate for Britain's seizure on July 4 of the Iranian tanker Grace 1, accused of violating sanctions on Syria.
"Current tensions are extremely concerning, and our priority is to de-escalate. We do not seek confrontation with Iran," the letter read. "But it is unacceptable and highly escalatory to threaten shipping going about its legitimate business through internationally recognized transit corridors."
Britain called on Iran to release the Stena Impero tanker and told the Security Council it was working to resolve the issue through diplomatic means.
Earlier on Saturday, British Defense Secretary Penny Mordaunt denounced the Iranian seizure as a "hostile act," rejecting Tehran's explanation that it had seized the vessel because it had been involved in an accident.
A spokesman for Iran's Revolutionary Guards, Brigadier-General Ramezan Sharif, said Tehran had seized the ship in the Strait of Hormuz despite the "resistance and interference" of a British warship which had been escorting it.
Iran's Fars news agency said the Guards had taken control of the Stena Impero on Friday after it collided with an Iranian fishing boat whose distress call it ignored.
The vessel, carrying no cargo, was taken to the Iranian port of Bandar Abbas. It would remain there with its 23 crew -- 18 of them Indians -- while the accident was investigated, Iranian news agencies quoted the head of Ports and Maritime Organization in southern Hormozgan province, Allahmorad Afifipour, as saying.
The strait, between Iran and the Arabian peninsula, is the sole outlet for exports of the vast majority of Middle Eastern oil, and the seizure sent oil prices sharply higher. The United States, which tightened sanctions against Iran in May with the aim of halting its oil exports altogether, has been warning for months of an Iranian threat to shipping in the strait.