The MT Putri Sea, registered in Malabo, Equatorial Guinea, went down on Thursday in a busy shipping lane off the southern state of Johor, near Singapore.
Authorities said all six Indonesian crew were missing and feared dead.
Two marine department boats were using chemical dispersants on the more than three kilometre-wide (two-mile) slick, Zulkifili Abu Bakar, director-general of the Maritime Enforcement Agency, said in a statement.
The oil spill is close to Petronas' billion dollar refinery and petrochemicals integrated development project in Pengerang.
Zulkifili said the spill had not affected shipping activities and that the affected area was not a fishing zone.
Wan Junaidi Tuanku Jaafar, natural resources and environment minister said a "tier one" response has been initiated to fight the oil spill.
"Measures are being put in place to ensure the oil slick does not reach land," he said in a separate statement.
Tier one is regarded as a minor oil spill that can be resolved within days.
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