The Malaysian Maritime Enforcement Agency (MMEA) said it raided a vessel named as Scorpio on Friday off Tanjung Piai.
Six men were syphoning fuel from the ship and loading it onto the 1,300-dwt Sea Jade (built 1985).
MMEA's southern region chief Adon Shalan said they spotted unusual ship-to-ship activity between the two vessels.
As a patrol boat approached, six masked men were seen fleeing in a wooden boat installed with a high-powered engine, which was next to Scorpio.
Investigations