Up to eight people were injured in the collision in the Hjeltefjord near Bergen, Norway, when the KNM Helge Ingstad crashed into a vessel from Malta.
The warship is currently in danger of sinking, while the tanker, named the Sola TS, is slightly damaged and did not spill oil.
The collision happened this morning at 3am (4am local time) during a training session, officials have confirmed.
The tanker had set sail from Equinor’s Sture oil terminal with a cargo of North Sea crude.
Nato’s Allied Maritime Command said in a statement: “Due to the damage to the frigate it was moved to a safe place.”
The tanker, which was carrying a crew of 23, was returned to port for an inspection.
It is unclear what caused the collision but several oil and gas terminals were shut down as a precaution.
These included the Sture export oil terminal, the Kollsnes gas plant and several offshore oilfields, all of which resumed operation later this afternoon.
The Sture terminal sees more than 25 percent of Norway’s oil production pas through the facility, while the Kollsnes plant processes gas for a number of EU member states as well as the UK.
A source told AFP news agency a “small oil slick” was detected from the warship and that “it took on a lot of water and there is a real danger that it sinks where it is”.
Twitter users are waiting to see if the huge vessel sinks while uploading images onto social media.
One said: “The situation is going bad to worse for Norwegian frigate #HelgeIngstad.”
An image of the ship tipped to one side was posted with the comment.
It can take a significant amount of time for larger ships to sink, with some taking up to 15 hours to be fully submerged under water.
The KNM Helge Ingstad frigate was launched in November 2007 and measures 134 metres long.