Sailors were captured evacuating the vessel as the fire burned behind them, photos posted on Iranian social media showed.
That came after Israel and Iran had blamed each other for a series of reported attacks on cargo ships since late February. Fars published video of thick, black smoke rising from the ship early Wednesday morning.
The ship caught fire at 11 am (0630 GMT) on Tuesday as it was in "domestic waters" during "a training mission", Iran's Tasnim news agency quoted the navy's head of public relations Behzad Jahanian as saying.
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But dancing is advised against due to the increased risk of transmission, except for the couple's traditional first dance. Earlier this month the Sun had reported that wedding invitations had been sent to friends and family for July 2022 .
No reason was provided for the cause of the fire but an army official told Iran's IRNA the fire started in the engine room and parts of the ship's body melted and fell into the sea.
The blaze began around 2:25 a.m. and firefighters tried to contain it, Fars said. It could also launch helicopters.
The Kharg was commissioned by the Shah of Iran and built in the United Kingdom in the 1970s.
Iran's navy typically handles patrols in the Gulf of Oman and the wider seas, while the country's paramilitary Revolutionary Guard operates in the shallower waters of the Strait of Hormuz and the Persian Gulf. In recent months, however, the navy launched a slightly larger commercial tanker called the Makran it converted into serving a similar function as the Kharg.
The shipping incidents have occurred since U.S. President Joe Biden took office in January, pledging to rejoin Iran's 2015 nuclear containment deal with six world powers - abandoned by his predecessor Donald Trump in a move welcomed by Israel - if Tehran returns to full compliance with the accord. In 2018, an Iranian destroyer sank in the Caspian Sea. In 2020, a training vessel was mistakenly hit by a missile near the Port of Jask, ending in 19 casualties, per AP.
The sinking of the Kharg marks the latest naval disaster for Iran.