The oil from the tanker is condensate oil that is expected to quickly evaporate upon hitting the water, with "very little residue on the water's surface", the ministry said.
The ship, the Panama-registered Sanchi tanker, was carrying Iran-produced condensate, a highly flammable ultra-light crude, to deliver to South Korea when it collided with a Chinese freight ship in the East China Sea, on Saturday January 9, 2018.
"Spilled oil covering the ship body and its surrounding water is still burning, which leaves Sanchi at risk of exploding and sinking", said the MOT in the statement.
The 21 Chinese crew members of the CF Crystal vessel, which had been carrying grain from the United States, were rescued.
Images of the tanker an hour earlier showed thick plumes of black smoke rising from the vessel, as other boats tried to extinguish the flames with water jets.
Bad weather at the sea has made the rescue and cleanup efforts hard.
The entire crew of the Panamanian-registered Sanchi - 30 Iranians and two Bangladeshis - went missing after its collision with the Chinese freighter CF Crystal.
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The tanker, run by Iran's top oil shipping operator National Iranian Tanker Co, hit the CF Crystal vessel that was carrying US grain on Saturday.
The cause of the collision and damage to the tanker were not clear.
One body has been found but 31 sailors - mainly Iranians - remain missing with officials in Iran hoping they have found sanctuary on an unaffected part of the vessel.
Iran's Shana news agency reported that the Sanchi was managed by the National Iranian Tanker Company and that its cargo was worth around $60 million.
The tanker Sanchi was carrying nearly 1 million barrels of condensate, an ultra-light, highly flammable crude oil, to South Korea.
Search and rescue teams from the South Korean Coast Guard have been forced to stay as far as three miles away from the ferocious blaze.