An Indian-flagged wooden cargo vessel has sunk in Omani waters following a suspected drone or missile strike, India confirmed on Thursday.

This incident marks the second vessel lost in the region since the Iran conflict began on 28 February, a conflict that has left hundreds of ships stranded and 20,000 seafarers unable to navigate the Strait of Hormuz into the Gulf of Oman.

The dhow, a traditional wooden vessel, was en route to the United Arab Emirates from Somalia when it was struck in the early hours of Wednesday, according to India's shipping ministry.

The impact caused a fire onboard, ultimately leading to its sinking.

All 14 crew members were successfully rescued by the Omani coast guard and transported to Diba port.

While India's statement did not specify the nature of the attack or identify those responsible, British maritime risk management group Vanguard suggested the explosion was likely caused by a drone or missile. The vessel was reportedly carrying livestock.

Maritime security sources separately assessed that it was likely to have been a drone attack.

"The attack on an Indian-flagged ship off the coast of Oman yesterday is unacceptable and we deplore the fact that commercial shipping and civilian mariners continue to be targeted", the Indian foreign ministry said in a statement.

"India reiterates that targeting commercial shipping and endangering innocent civilian crew members, or otherwise impeding freedom of navigation and commerce, should be avoided", it said.

The vessel was named by Indian shipping ministry officials as the Haji Ali. It last reported its position off the coast of Muscat on 11 May, ship tracking data on the MarineTraffic platform showed. Its operators could not be reached for comment.

At least two other Indian-flagged ships have been attacked since the US-Israeli war with Iran erupted on 28 February.

India last month summoned the Iranian envoy to New Delhi and flagged its "deep concern" over the incidents.

The Iran war has sharply increased risks for commercial shipping in the Gulf, particularly around the Strait of Hormuz, a vital energy transit route, with multiple vessels attacked or damaged since the conflict began.

The latest Indian statement came as foreign ministers of the BRICS grouping, including from Iran, gathered in New Delhi for their annual meeting under the shadow of the war, testing the bloc's ability to reach a unified position and produce a joint statement.