Gibraltar Sunday rejected a U.S. demand to seize an Iranian oil tanker at the center of a diplomatic dispute as it prepared to leave the British overseas territory after weeks of detention. British Royal Marines seized the vessel in Gibraltar in July on suspicion that it was carrying oil to Syria, a close ally of Iran, in violation of European Union sanctions. That detention ended last week, but on Friday a federal court in Washington issued a warrant for the seizure of the tanker, the oil it carries and nearly $1 million.

Gibraltar said yesterday it could not comply with that request because it was bound by EU law. "The EU sanctions regime against Iran, which is applicable in Gibraltar, is much narrower than that applicable in the U.S.," the government said in a statement.

Washington had attempted to detain the Grace 1 on the grounds that it had links to Iran's Islamic Revolutionary Guard Corps (IRGC), which it has designated a terrorist organization. Iran has denied the tanker was ever headed to Syria. The vessel became a pawn in a bigger game, feeding into wider hostilities since the U.S. last year pulled out of an international agreement to curb Iran's nuclear program and reimposed economic sanctions. In the past weeks, the Persian Gulf region has seen six attacks on oil tankers that the U.S. has blamed on Iran and the downing of a U.S. surveillance drone by Iranian forces.