June 18 (Bloomberg) -- Europe’s sanctions on insurance for Iranian oil shipments won’t be lifted or suspended as Asian importers look to governments to cover cargoes.
Insuring ships carrying crude from the Persian Gulf country will be banned when the European Union’s embargo takes effect July 1, Michael Mann, foreign-policy spokesman for the 27-nation bloc, said today in Moscow. The rules apply to 95 percent of the world’s tankers because they’re covered by the 13 members of the London-based International Group of P&I Clubs.
The EU delayed the ban on insurance against risks including spills and collision until July 1 amid discussions with government and industry officials about its global reach. As negotiators meet in Moscow today for talks on the Iranian nuclear program, the embargo’s nearing implementation date puts pressure on countries seeking to continue buying the nation’s oil as they consider sovereign coverage for shipments.
“Vessels need liability insurance to trade, and if they want to go to Japan, China or India, where is the liability insurance going to come from?” Mike Roderick, a partner at international trade-law firm Clyde & Co. in London, said by phone today. “The only parties with deep-enough pockets are sovereign governments.”
Iran’s daily crude exports will fall by 1 million barrels in the year’s second half as sanctions enter force, the International Energy Agency estimates. The U.S. and Europe suspect the Persian Gulf country’s nuclear program involves weapons development. The Tehran government, facing four sets of United Nations sanctions, says it is enriching uranium for civilian and medical purposes.
Japan’s cabinet advanced a bill to provide sovereign insurance to tanker operators that carry Iranian oil. The measure must be approved by the national parliament. Ship owners in India have also asked for government coverage and China has underwritten some shipments, according to the IEA.