The spill occurred on Thursday just north of the Red Sea resort city of Eilat and was quickly stopped, but not before at least a million litres of oil -- the equivalent of 40 tanker trucks -- gushed out in an area that is a protected nature reserve.
"It's the biggest ecological disaster Israel has seen," Gilad Golub of Israel's Environmental Services Company told AFP.
"This is because of the material itself, crude oil, which is particularly hard to flush out, and the location of the spill" on the reserve, he said.
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Golub also expressed concern that "with the next rain, the oil could pour into the Gulf of Eilat".
An Eilat Ashkelon Pipeline Company (EAPC) spokesman told AFP the leak, reportedly caused by a vehicle accidentally hitting the pipeline, was blocked within "minutes", but would not give an exact figure for how much oil was spilled.
Israel's Haaretz newspaper cited a letter from the company to the environmental protection ministry estimating the leak at three million litres, up from an initial figure of one million.
The EAPC and the ministry were still working "around the clock" to clean up the spillage, the company said in a statement.