An oil tanker carrying around $9 million worth of petroleum products was in collision with a container vessel off the Dubai coast on Tuesday, setting both vessels on fire and sending up a thick plume of black smoke.

The tanker, called the Kashmir, was built in 1988. It was carrying some 30,000 tonnes of oil condensates from Iran to the United Arab Emirates port of Jebel Ali, oil industry sources said.

The second ship was a container vessel called Sima Buoy, which was leaving the port when the incident took place, ship brokers said.

The official Wam news agency said the two vessels collided at 1235 (0835 GMT), around seven nautical miles from Jebel Ali port.

It was not immediately clear what caused the incident but one witness said the oil tanker appeared to be badly damaged.

"I work for a sea plane company so when we saw the flames from the shore we went up to have a look," witness Matthias Seifert told Reuters.

"We saw two ships, one of them badly damaged. Both were on fire but the tanker looked like it was about to sink."    
Dubai, part of the seven-member UAE federation, is a small oil producer, pumping less than 100,000 barrels per day. The UAE is the world's fifth-largest oil exporter with current output of around 2.26 million barrels per day.

Most of the UAE's oil is located in the capital Abu Dhabi and oil industry sources said the fire did not involve any of Dubai's offshore oil platforms.

In September, a helicopter crashed into an oil rig off the coast of Dubai, killing all seven people on board and forcing the closure of the Rashind oil field.

Condensates are light oils prized by refiners and petrochemical firms. - Reuters