The explosion, which occurred off South Korea's west coast, tore apart the front of the ship and left the 4,198-ton vessel partially submerged.
There was no word on what caused the blast, but Coast Guard officials don't believe North Korea had any involvement.
In 2010, North Korea was accused of torpedoing a South Korean warship, killing 46 sailors. North Korea has denied involvement.
The ship's captain, who survived, said the explosion may have been caused by static electricity which ignited gasoline vapors from an onboard tank where 11 crew members were working before the blast, according to Yonhap news agency.
The cargo ship, which usually carried refined petroleum products and chemicals, was carrying 80 tons of Bunker-C oil and 40 tons of diesel oil for fuel when it exploded, the coast guard statement said. Oil leakage wasn't immediately reported.
Eleven members of the crew are from South Korea, and the other five are from Myanmar.
The Associated Press contributed to this report.