Iranian forces seized 15 British servicemen on Friday in the mouth of the waterway that separates Iran and Iraq, triggering a diplomatic crisis at a time of heightened tensions over Tehran's nuclear ambitions.
Britain said two boatloads of sailors and marines from the naval frigate Cornwall had searched a merchant vessel in Iraqi waters on a UN approved mission when Iranian gunboats encircled and captured them.
British Foreign Secretary Margaret Beckett said she was "extremely disturbed". Britain summoned Iran's ambassador in London and protested through its embassy in Tehran.
"We sought a full explanation of what happened and left the Iranian authorities in no doubt that we expect immediate and safe return of our service personnel and boats," Beckett said.
Washington backed its ally. "We support the British demand for the safe return of their people and equipment," State Department spokesman Sean McCormack said.
Tehran maintained silence throughout the day. The incident sent oil prices up more than one percent to a three-month high.
It took place a day after Iran launched a week of naval war games along its coast, including the Gulf's northern reaches which give access to the oil output of Iraq, Iran and Kuwait.
"There was no fighting, no engagement of weapons, anything like that, it was entirely peaceful," said Commodore Nick Lambert, commander of the British fleet in the area.
"We have been assured from the scant communication we have had with the Iranians at a tactical level that the 15 people are safely in their hands," he said aboard the Cornwall.
British officials were wary of drawing the conclusion that the incident was a deliberate provocation by Tehran.
"This may well be a misunderstanding. We're certainly treating it as such at the moment. We're looking for the mistake to be corrected," a British government source said.
Unlike the United States, Britain has diplomatic relations with Iran. But London backs Washington's calls for tough sanctions against Iran over its nuclear programme.
The UN Security Council is due to vote on Saturday on new sanctions against Iran for refusing to halt enrichment of uranium, which Western countries say could be used for weapons and which Tehran says is for power. London and Washington also say Iran foments violence in Iraq.
An Iraqi fisherman in Basra, who asked not to be named, told Reuters he had seen the incident near the mouth of the Shatt al-Arab waterway that separates Iraq from Iran.
He said Western military personnel in two small boats had boarded a ship. At least two Iranian vessels appeared on the scene and detained them.
British Royal Navy personnel include both sailors and marines, who make up boarding parties for ship searches as part of a mission that includes the U.S. and Australian navies. Washington said no U.S. military personnel were involved.
The incident was similar to one in 2004 in which eight British servicemen spent three nights in the hands of Iranian Revolutionary Guards before being released unharmed.
In that incident, the Iranians accused them of crossing into Iranian waters, which Britain disputed.
(Additional reporting by Peter Graff, Sophie Walker, Paul Hughes and Randy Fabi in London and Ross Colvin in Baghdad)