The fate of the detained Iranian tanker Grace 1 in Gibraltar is to be decided as authorities prepare to head back to court on Thursday.
Six weeks ago, UK marines seized the vessel as it travelled through the Strait of Gibraltar. There were suspicions that it was taking oil to Syria in breach of EU sanctions.
Grace 1's detention led to reciprocal seizures by Iran and a diplomatic war of words in which the UK being has been accused of "piracy".
On Tuesday, Iran announced that the tanker was due to be released imminently but that was quickly denied by Gibraltar.
Its Supreme Court ruled last month to extend its detention for a further 30 days. The tanker had initially been held for 14 days.
The 30-day deadline expires on Thursday and the court will have to decide whether or not to release the tanker. It only has the power to hold it for 60 more days, until mid-October.
The deputy head of Iran's Ports and Maritime Organisation, Jalil Eslami, told state news agency Irna on Tuesday that Britain was thinking of freeing the Grace 1 after an exchange of documents.
"The vessel was seized based on false allegations," Mr Eslami said. "We hope the release will take place soon."
Iran's semi-official Fars news agency later quoted unidentified Gibraltar authorities as saying it would be free by Tuesday night.
A senior Gibraltarian government source said that was not correct, although earlier the territory said it was seeking to ease the situation.
After the exchange, Britain’s Foreign Office said on Tuesday that investigations into the tanker were a matter for Gibraltar.
"The investigations being conducted around the Grace 1 are a matter for the government of Gibraltar," a spokesman said.
"As this is an ongoing investigation, we are unable to comment further."
Last week, the government of Gibraltar said it had “clear evidence” that the tanker was heading for a Syrian oil refinery in breach of EU sanctions.
“Apart from the operational issues, which are for the police, the evidence we have entirely contradicts the statements by the captain, in particular in relation to accessing Baniyas refinery in Syria," the government said.
“We will make a fuller statement in due course setting out why the evidence now points even more clearly to the destination having been Baniyas.
“That statement will also, at the appropriate time, address all of the other misinformation that has been circulated by various sources.”
There have been repeated talks between the nations since the incident.
The UK's former foreign secretary Jeremy Hunt offered to help with the release of Grace 1 if Iran agreed not to break sanctions.
Mr Hunt's replacement, Dominic Raab, said the UK's approach to Iran had not changed and that it advocated keeping the 2015 nuclear deal and defusing the situation.
“It is vital to secure the freedom for all international shipping to navigate the Strait of Hormuz without delay, given the increased threat," Mr Raab said.
The Grace 1 is being held off the coast of Gibraltar.
The ship's captain, chief officer and two second officers, who were arrested, remain on bail without charge as the investigation continues.
