Guy Ester, foreign affairs editor of Walla News, took to Twitter to update on what happened.
More than 150,000 litres of deisel were discovered onboard.
Mr Ester tweeted: “#BREAKING #Iran navy says it has seized foreign ship in the Gulf while ‘smuggling diesel'”
Tasnim News tweeted: Seizure of a foreign ship in Persian waters.
“Commander of Naval Type 412 Zulfiqar of Parsian city:
“Navy Parsian Marines seize a foreign ship carrying smuggled fuel in the waters of this city.
“After inspecting the vessel, more than 150,000 liters of smuggled diesel were discovered.”
Iran were recently slammed for taunting a US warship in the Gulf of Oman.
An Iranian helicopter was involved in an apparent fly-by after flying within 25 yards of the USS Essex.
Pentagon press secretary John Kirby explained how the Essex responded to this fly-by, saying: “Without getting into specifics, the crew of the Essex took the appropriate force protection measures they felt that they needed to, and they acted in accordance with international law.”
Mr Kirby added that the incident did not have any impact on the ship’s operations.
Mr Kirby continued: “When you have another armed force — in this case, the Iranian navy — that flies like this, you definitely run the risk of some sort of escalation and a miscalculation on either side here, and that’s not helpful.
“This one ended peacefully, but it doesn’t mean it was safe and professional.
“It absolutely wasn’t.”
More to follow