LONDON (BLOOMBERG) - Prime Minister Theresa May held a meeting of the UK's emergency committee on Monday (July 22) to discuss the security of shipping in the Persian Gulf, after Iran seized a British oil tanker in the Strait of Hormuz last week.

May and the committee of top officials and ministers, dubbed Cobra, has convened in London, her office said. Foreign Secretary Jeremy Hunt and Defence Secretary Penny Mordaunt are at the talks.

The UK demanded the immediate release of the Stena Impero, and summoned Iran's charge d'affaires in London, Mohsen Omidzamani, following the incident in one of the world's critical energy chokepoints.

While the government threatened Iran with "serious consequences" and advised UK ships to avoid the area, it also made clear it's not seeking to exacerbate tensions.

"We do not seek confrontation with Iran, but it is unacceptable and highly escalatory to seize a ship going about legitimate business through internationally recognised shipping lanes," May's spokesman, James Slack, told reporters in London.

"The ship was seized under false and illegal pretenses, and the Iranians should release it and its crew immediately."

On Sunday, the Iranian flag was seen flying over the bridge of the tanker in the Bandar Abbas port, according to images aired by state-run Press TV.

Tensions have flared in the Strait of Hormuz in recent weeks as Iran lashes out against US sanctions that are crippling its oil exports and after the seizure of one of its tankers near Gibraltar. The Strait accounts for about a third of the world's seaborne oil flows, and Brent crude rallied as much as 2.4 per cent on Friday's news.

The UK plans to take further measures this week, Hunt said in a statement, without giving details. He is due to take questions in the House of Commons later on Monday.

The Sunday Telegraph said diplomatic and economic measures, including a freeze on Iranian assets, are being considered and the UK may push the European Union and United Nations to reimpose sanctions on Iran.

But on Sunday, Chancellor of the Exchequer Philip Hammond sought to downplay that threat.

"We've already got a wide raft of sanctions against Iran, particularly financial sanctions, so it's not clear that there are immediate additional things that we can do but we are of course looking at all the options," Hammond said in a BBC interview.

Still, "it was an illegal act and we're going to pursue every possible diplomatic route to resolve this issue".

Iran doesn't have any assets that the British government could seize, according to Ali Naghi Seyyed-Khamoushi, head of the Iran-Britain Joint Chamber of Commerce in Teheran. Any sanctions wouldn't affect Iran's exports and imports to any great extent, he said, according Iran's Tasnim news agency.

With May set to leave office on Wednesday, the latest clash with Iran presents a diplomatic headache for her successor. The favourite to be named the new Conservative Party leader is Boris Johnson, and his opponent, Hunt, on Saturday tweeted that British shipping will be protected in the Persian Gulf.

On Monday, May's spokesman told reporters the UK doesn't have the capacity to protect every vessel.

US Central Command has announced a "multinational maritime effort" called Operation Sentinel to "increase surveillance of and security in key waterways in the Middle East to ensure freedom of navigation in light of recent events in the Arabian Gulf region".

Relations between Iran and the West have worsened since US President Donald Trump pulled out of the 2015 multi-nation agreement with Iran to limit its nuclear programme. The US reimposed the sanctions that had hobbled the Iranian economy and has been pressuring European allies to respect the sanctions and curtail their trade with Iran.

Iran's Revolutionary Guards said on Saturday that the British ship entered the strait from the wrong direction, wasn't paying heed to maritime regulations and could potentially have collided with other vessels. State television said the ship will be held until judicial assessments are complete.

Stena Bulk, the ship's owner, said on Sunday that a request to the authorities at Bandar Abbas - where the vessel is anchored - to visit the 23 crew members had been acknowledged. The company hasn't yet received a formal response.

Iran has also suggested its actions are in retaliation for Britain's seizure of the Grace 1 tanker off Gibraltar. A court in Gibraltar ordered the continued detention of the vessel for another 30 days, after it was held on suspicion of taking oil to Syria. Iran denies that was the destination.

In recent weeks the UK Navy has escorted some tankers out of the region, while the US said it downed an Iranian drone just days ago. The latest incident cooled hopes that the US and Iran would soothe tensions by entering into negotiations.

In Washington, Trump said he will be "working with the UK" and suggested the latest developments justify his harsher approach toward Teheran.

"This only goes to show what I'm saying about Iran: trouble, nothing but trouble."