LONDON (BLOOMBERG) - The reopening of the British embassy in Teheran was meant to usher in a new era in relations.

As the Union Jack flag was raised above the lush, landscaped gardens of the complex in August 2015, then-Foreign Secretary Philip Hammond said the event marked "an important milestone".

That was just six weeks after an international accord was reached to restrict Iran's nuclear programme in return for relief from penalties that had strangled its economy. But since the accord started to unravel last year, tensions between Britain and Iran have been growing.

Then came Friday's (July 19) dramatic seizure of a British-linked tanker in the Gulf, a tit-for-tat response to the UK's detention of a vessel carrying Iranian oil through the Mediterranean Sea.

The UK has threatened Iran with "serious consequences", which could include a package of sanctions.

How did things get so bad? The UK is after all part of a European trio trying to rescue the nuclear deal US President Donald Trump pulled out of, triggering its demise.

But it is also breaking away from the European Union and desperate for a free-trade agreement with the US, still the world's dominant economy.

IT'S COMPLICATED

In short, its geopolitical priorities are complex.

Britain's relations with Iran stretch back to the 1600s and are marked by periods of conflict, some resolved fairly swiftly and others that endure to this day.

For example, Iranians still blame Britain for a famine 100 years ago. Underlying it all is a sense the UK is playing a double game.

"Iranians are obsessed with the idea that the British are the arch-manipulators in the background, manipulating the US," said Dr Ali Ansari, a professor of modern history in the Middle East at the UK's University of St Andrews.

"It dominates the narrative in a way you'd never imagine."

Brexit-ravaged Britain is trapped in a political crisis, transitioning from one prime minister to another.

The two Conservative candidates slugging it out to become leader also happen to be both the current and former foreign secretary: Mr Jeremy Hunt and Mr Boris Johnson, favoured to win and whom Mr Trump calls a friend.

Iran was never a colony of the Empire on paper, but nevertheless the UK has wielded outsized influence in the country over centuries.

During the Great Game of the 19th century, when Victorian Britain and Tsarist Russia battled for dominance in Central Asia, Persia was caught in the middle.

LIQUID GOLD

It struggled to balance the demands of the two imperial powers and though Russia was always the more brutal of the two, Britain left deeper political scars.

That's partly because events of the early 20th century "altered the historical perspective", Dr Ansari said.

Then, as now, those events revolved around oil.

In 1901, British entrepreneur William Knox D'Arcy began searching for oil in Persia and under the terms of a deal struck with the monarchy, he became the sole owner of whatever oil he'd find, while Persia would get just 16 per cent of profits annually and no say over how the company was run.

The Anglo-Persian Oil Company was born seven years later when Mr D'Arcy's surveyors discovered crude beneath the southern desert.

"Fortune brought us a prize from fairyland beyond our wildest dreams," said Mr Winston Churchill, who was in charge of the Navy at the time and oversaw its switch from coal to oil.

COLONIAL BAGGAGE

The British government injected new capital into the Company just before World War I, acquired a controlling interest and built the world's largest refinery near the Persian Gulf to process the oil and ship it back to Britain.

The company ran the city like a virtual colony: British employees and their families lived in luxury in a peaceful oasis on one side of the city and non-British labourers in a shanty town on the other.

Unsurprisingly, strikes and riots broke out sporadically. In 1951, as a wave of anti-colonialism swept the region, the company was nationalised under the government of Prime Minister Mohammad Mosaddegh. Iran cancelled its right to extract oil and seized its assets. Britain shut down refineries, blockaded Iran's ports and froze Iranian bank accounts.

When it became clear Mr Mosaddegh had the upper hand, the UK lobbied the US to install a shah sympathetic to the west. Together in 1953, they overthrew him in a coup.

BIRTH OF BP

Iranian oil began flowing again and the company - which had by then rebranded itself as British Petroleum and is now known as BP - tried to regain its old position.

But Iranian public opinion was so fiercely opposed the new government couldn't let that happen.

Instead it was forced to accept membership in a consortium of companies. After the repressive shah was exiled during 1979 Islamic Revolution, the anti-western regime of Ayatollah Ruhollah Khomeini nationalised the oil industry again.

The seizure of the tanker carrying Iranian oil off the southern tip of Spain earlier this month, like most of US policy toward Iran under Mr Trump, has unified rival political factions.

It has also given the Islamic Republic's stalwarts a fresh opportunity to attack Britain as an imperialist, colonialist, pro-monarchist power intent on meddling in Iran's affairs.

'QUEEN'S PIRATES'

On July 6 - two days after British forced seized a supertanker suspected of carrying Iranian oil to Syria - Iranian media was swift to respond.

The headline in the moderate Arman newspaper read A US Scenario with British Actors, while the reformist Aftab spoke of Extremism in Gibraltar.

The ultra-hardline daily Kayhan has called for retaliation against "the Queen's pirates".

The Iran-Iraq war of the 1980s, in which the UK backed Saddam Hussein, and a fatwa against the writer Salman Rushdie have been among low points in ties between Iran and Britain.

More recently, the fate of UK-Iranian dual national Nazanin Zaghari-Ratcliffe - held by Iran on spying charges since 2016 - has poisoned the well.

She has recently been transferred from the notorious Evin prison to a hospital psychiatric ward and is barred from contacting her family.

Mr Johnson, as foreign minister, was widely criticised for contributing to her fate by saying publicly she was in Iran teaching journalism.

Should he become prime minister, as is widely expected, the crisis with Iran will demand his immediate attention.

Just before Friday's extraordinary seizure of the tanker by Iran, Ayatollah Ali Khamenei said he wouldn't allow the "evil" acts of Britain to go unanswered.

Such menacing rhetoric was used back in 2011 in the run-up to an attack on the UK embassy in Teheran by hardliners.

They left behind scrawl on walls that read, "Death to England", near a portrait of Queen Elizabeth and a bust of Queen Victoria.

Britain closed the embassy.