Oil companies looking to steal a jump on rivals in the race to benefit from Iran’s emergence from Western sanctions risk having tankers left in limbo by international insurers’ continued reluctance to provide cover.
While companies jockey for position after world powers lifted curbs on Tehran’s banking, insurance and shipping sectors last month as part of a nuclear deal with Iran, international insurers are no nearer to resolving concerns over U.S. sanctions that remain in place.
Lars Lange, secretary general of the International Union of Marine Insurance (IUMI), said insurers faced the risk of massive fines if they fall foul of existing measures.
“It all comes back to this basic principle that we have to be very, very careful with our steps,” Lange told a news conference on Tuesday. “It is paramount that we comply with all sanctions.”
With measures still in place from Washington prohibiting U.S. individuals or companies from trading with Iran, Frederic Denefle, chairman of IUMI’s legal and liability committee, said insurers are still seeking to clarify details on the parameters of the U.S. sanctions.
In recent days, oil companies have been trying to conclude deals for their first Iranian cargoes. One tanker, which broker fixtures show has been booked by France’s Total, is on its way to Iran to pick up oil. According to ship-tracking data, the Atlantas tanker is due to arrive in Iran on Feb 12. Trade houses are also looking to conclude deals.
“Insurance is the No.1 issue for everyone,” one tanker industry source said. “There is still not enough clarity on where we stand.”
Iran’s oil exports, which had peaked at more than 3 million barrels per day (bpd) in 2011, fell to a little more than 1 million bpd after tougher sanctions were imposed in 2012.
After the rubber-stamping of the nuclear deal, however, Tehran has ordered a 500,000 bpd increase in oil output, of which 200,000 bpd will go to Europe.
Third-party liability insurance and pollution cover for vessels is provided by P&I clubs — marine insurers owned by shipping clients and reinsured internationally.
The International Group, which represents the top P&I clubs, recently flagged the potential for a “snap back” in sanctions if Iran fails to meet its nuclear commitments and advised members to include provision for termination of contracts at short notice.
(Editing by David Goodman)
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