Iran has demanded the immediate release of the tanker Grace 1, which British Royal Marines boarded off the coast of Gibraltar last week and seized over accusations it was breaking sanctions by taking oil to Syria.

"You (Britain) are the initiator of insecurity and you will realise the consequences later," Rouhani was quoted by Tasnim as saying after a cabinet meeting.

Rouhani also said Iran's decision to increase uranium enrichment would produce fuel for power plants and serve other peaceful aims, and that it was within the framework of Iran's 2015 nuclear deal with world powers.