rom the 1st of July a European Union ban comes into force which prevents the insurance cover on oil tankers transporting Iranian oil. Approximately 90% of the world’s tankers have insurance and indemnity cover from the West, with Lloyds of London being one of the major insurers. Cover includes environmental cleanup and personal injury and is obligatory. The EU ban is just one of many measures to increase pressure on Iran’s nuclear weapons programme, with the EU and the United States threatening further sanctions if international calls for the suspension of the nuclear weapons programme is not suspended. The result of the lack of insurance cover is that several of Iran’s customers are having to provide their own insurance or guarantees. This includes Iran’s biggest customer, China and others such as Japan and India. However, South Korea has just announced suspension of Iranian oil imports from the 1st of July in keeping with the suspension of insurance cover. South Korea is the fourth largest customer of Iranian oil and has no natural resources of its own, so depends upon imported crude. The shortfall in imported oil will be replaced by new deals with other Arab countries such as Kuwait, Qatar and the United Arab Emirates.
This saga seems to be running on and on with no solution in sight, at least that is how it would appear. Iran would appear to be thumbing its nose at the rest of the world, including its neighbours who will perhaps have problems exporting their own oil if the Iranian government goes ahead with their threat to close the Strait of Hormuz to shipping.
Further information on the EU embargo