It collided with the freighter CF Crystal that was carrying grain from the United States about 184 kilometers off China's coast near Shanghai.
The Coast Guard has sent ships and aircraft to monitor the situation.
The source said that the Sanchi, operated by the National Iranian Tanker Company, as well as the other vessel involved in the collision, CF Crystal, have the IG reinsurance cover of up to Dollars 7.8 billion each.
The blast happened on board the tanker in the afternoon after rescue crews were dousing the ship with foam in an attempt to put out the fire, China's Transport Ministry said in a statement on Wednesday. On Tuesday (9 January) NITC reportedly told Bloomberg that some of Sanchi's 31 missing crew members who remain missing could still be alive in the tanker's engineroom, which lies some 14 m below the waterline and "is not directly affected by the fire". The ship was carrying condensate, a highly flammable ultra-light crude, to deliver to South Korea when it collided with a Chinese freight ship on Saturday.More news: Republican senators in Trump meeting say they don't recall 'shithole' comment
The changes took place as the IG has created a protection and indemnity reinsurance framework, without having contributions from U.S. insurers, in an effort to bring back its coverage to a near pre-sanction level for the first time since impositions of global sanctions against Iran in mid-2012, according to sources familiar with the matter.
Photos on the Chinese Ministry of Transportation's microblog showed thick black smoke pouring from the ship on Thursday morning.
The rest of the crew, which included 30 Iranians and two Bangladeshis, remains missing.More news: TiVo will soon work with IFTTT, Google Assistant, and Alexa
An official from South Korea's Ministry of Oceans and Fisheries was quoted in a Reuters report as saying the fire could last for weeks.
A day earlier, the engineer of the highest category of emergency response center for spill of fuel management for safety at sea in Yantai Zhao An in the published statement of the Ministry of transport noted that the gas condensate contains toxic hydrogen sulphide and evaporation can pollute the atmosphere.
Trying to contain a spill of condensate, which is extremely low in density, highly toxic and much more explosive than normal crude oil, may be hard.
Unknown the causes of the collision, of course it is instead that China is facing an unprecedented environmental disaster since the tanker carried 150 thousand tons of condensed oil mostly finished at sea.More news: Liverpool host City as Premier League returns
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