The incident took place some 60 miles from Jeddah early Friday morning, Iran's Press TV reported citing informed sources as saying.
The explosions have reportedly hit the National Iranian Tanker Company (NITC) tanker's hull, causing heavy damages to the vessel's two main tanks, which has resulted in the oil spill. The spill has currently stopped, according to the sources.
Technical experts were investigating the cause of the explosion. They believe it was a "terrorist attack", unnamed sources told the Iranian Students News Agency (ISNA).
A statement by NITC said the SABITI tanker was hit by two separate explosions at 5 and 5.20 a.m., probably after being struck by missiles.
It said the crew members were currently safe and none of them has been harmed in the explosions. The tanker was also in a stable condition, the statement added.
The NITC later dismissed the reports that the vessel had caught fire, according to the Iranian Ministry of Petroleum's official news agency SHANA.
Friday's explosions came a few months after the Iranian oil tanker Happiness-1 faced "engine failure" and lost its control with 26 onboard off the Red Sea port of Jeddah, and was later transferred to the port city for maintenance, reports Press TV.
According to Iranian officials, the incident had occurred on April 30 while Happiness-1 was on its way to the Suez Canal, and that water had leaked into the tanker's engine room.
The Saudis refused to let the vessel leave and demanded that Iran pay $200,000 a day for maintaining the vessel in the port, some $10 million in total. It was finally released on July 20 and returned home.
In June, two large tankers Marshal Islands-flagged Front Altair and the Panama-flagged Japanese-owned Kokuka Courageous were hit by explosions in the Sea of Oman.
At that time, Iranian rescue workers rushed to the assistance of two tankers hit by the unspecified accidents in the Sea of Oman, transferring all of their 44 crew members to its southern shores.
( With inputs from IANS )