Two separate explosions hit an Iranian oil tanker on Friday, which set the ship on fire, Iran’s ISNA news agency has reported.
The vessel, belonging to Iran’s national oil company (NOIC), was 60 miles (97km) from the Saudi port city of Jeddah when the incident took place, reports said.
The ship’s two main storage tanks are said to be damaged, spilling oil into the Red Sea, but no-one was injured.
NOIC claimed the vessel was hit by missiles but has not given evidence.
The incident comes amid heightened tension between Iran and Saudi Arabia.
Last month, drones and cruise missiles hit a major oil field and processing facility in Saudi Arabia, which blamed Iran for the attack.