grace 1 adrian darya
© Reuters
The Iranian flag flies at oil tanker Adrian Darya 1, previously named Grace 1, as sits anchored in the Strait of Gibraltar on Sunday, August 18, 2019.
Gibraltar refused a US request to seize the Iranian tanker Grace 1 on Sunday, saying it was unable to comply because it was bound by European Union law.

A federal court in Washington on Friday issued a warrant for the seizure of the tanker, the oil it carries and nearly $1 million. British Royal Marines had detained the vessel in Gibraltar in July on suspicion that it was carrying oil to Syria in violation of EU sanctions.

"The Central Authority's inability to seek the Orders requested is a result of the operation of European Union law and the differences in the sanctions regimes applicable to Iran in the EU and the US," a Gibraltar government statement said.

"The EU sanctions regime against Iran - which is applicable in Gibraltar - is much narrower than that applicable in the US."

The tanker raised an Iranian flag and and had a new name painted on its side, Reuters images of the stationary vessel filmed off Gibraltar showed on Sunday.

The Iranian tanker caught in a stand-off between Tehran and the West is expected to leave Gibraltar on Sunday night, Iran's ambassador to Britain tweeted on Sunday.

"The vessel is expected to leave tonight," envoy Hamid Baeidinejad said on Twitter, adding that two engineering teams had been flown to Gibraltar.

Video footage and photographs showed the tanker flying the red, green and white flag of Iran and bearing the new name of 'Adrian Darya-1' painted in white on its hull. Its previous name, 'Grace 1', had been painted over. The vessel's anchor was still down.

The Grace 1 had originally flown the Panamian flag but Panama's Maritime Authority said in July that the vessel had been de-listed after an alert that indicated the ship had participated in or was linked to terrorism financing.

Gibraltar lifted a detention order on the vessel on Thursday but its fate was further complicated by the United States, which made a last-ditch legal appeal to hold it.

The initial impounding of the Grace 1 kicked off a sequence of events that saw Tehran seize a British-flagged oil tanker in the Gulf two weeks later, heightening tension on a vital international oil shipping route.

That tanker, the Stena Impero, is still detained.

The two vessels have since become pawns in a bigger game, feeding into wider hostilities since the United States last year pulled out of an international agreement to curb Iran's nuclear program, and reimposed economic sanctions.