European Union governments will implement all EU sanctions relief for Iran covered by a landmark nuclear deal on Jan. 20, the day the agreement takes effect – including lifting a ban on insuring its oil, officials said on Monday.
Under the Nov. 24 accord, the EU will suspend for six months a ban on insuring and transporting Iranian oil, as well as a trade ban affecting the country’s petrochemicals, gold and other precious metals.
The accord will go into effect next Monday provided the International Atomic Energy Agency (IAEA), the U.N. nuclear watchdog, confirms Iran is carrying out its part of the deal, meaning curbing its most sensitive nuclear work.
“Everything the EU does goes into effect on Jan. 20,” one EU official said.
Oil markets are watching the insurance provisions closely because Europe’s Protection and Indemnity (P&I) clubs provide cover for most of the global oil tanker market.
The body whose members provide liability cover to 95 percent of the world’s tanker fleet said it welcomed the move but would take a step-by-step approach to insuring Iranian energy cargoes again.
The deal also allows third-country purchases of Iranian oil to remain at current levels but does not envisage higher Iranian oil sales.
Specialist P&I insurers, mutually owned by shipping lines, dominate the market for insuring ocean-going vessels against pollution and injury claims, the biggest costs when a tanker sinks. Vessels transporting Iranian crude have been left with limited alternatives, mostly set up by importers.
“We would welcome the relaxation,” said Andrew Bardot, executive officer of the International Group of P&I clubs.
“We see it as a move in the right direction towards ensuring that ship owners that are carrying these oil cargoes can have access to proper insurance and liability insurance cover.”
Insurance specialists say even with the limited lifting of restrictions, it will take time before insurance providers will be able provide cover.
“It will be a relatively limited and gradual approach,” Bardot said.
The issue of providing cover is further complicated as a number of Iranian companies, including Tehran’s top oil tanker group NITC, remain under sanctions.
The United States, which is a party to the accord alongside China, Russia, Britain, France and Germany, estimates that sanctions relief provided to Iran under the agreement should be worth around $7 billion.
Washington will lift some U.S. sanctions on the first day of the six-month agreement’s implementation and some will be withheld until its final day. It has agreed to unblock Iranian access to $4.2 billion in oil revenues held abroad, but that will come in tranches.
The six countries negotiating with Iran hope the interim deal will give them time to hammer out a final settlement with the Islamic Republic.
(Reporting by Justyna Pawlak and Jonathan Saul in London; Editing by John Stonestreet)