The European Union allowed some insurance contracts for Iranian oil until July 1, scaling back an earlier plan to spare coverage against the risk of tanker collisions and spills from sanctions on Iran altogether.
EU foreign ministers approved today in Brussels detailed rules for enacting sanctions against Iran outlined in January, the bloc said. Because insurers of almost all the world’s tankers follow European law, its provisions on insurance tied to Iranian oil have an impact beyond the bloc’s borders.
The EU is seeking to balance the desire to punish the Iranian regime for its atomic-energy program, which western governments say aims to build nuclear weapons, against concerns about the economic impact that the oil embargo would have amid slowing growth.
To address a U.K. request for more study of the impact that the tighter loophole for third-party liability insurance and environmental-liability insurance will have on global oil prices, the ministers agreed to review the exemption before a meeting in May.
Europe has joined the U.S. in strengthening sanctions against Iran in a bid to persuade Tehran to discuss all aspects of the Islamic nation’s nuclear program and open it further to United Nations inspectors. The Iranian regime says its atomic activities are for civilian purposes including electricity production.
The EU on Jan. 23 banned oil imports from Iran while allowing existing contracts, as well as insurance related to them, to continue until July 1. Under that decision, the sanctions would affect insurance for 95 percent of the world’s tankers that are covered by the London-based International Group of P&I Clubs, according to insurers and ship owners.
Initial drafts of the EU’s more detailed rules for enacting the trade penalties emerged in February, when the bloc’s regulators proposed exempting insurance against the risk of tanker collisions and spills from the restrictions.
Today’s decision to permit third-party liability insurance and environmental-liability insurance until July 1 will allow tankers owned outside the EU to continue for three more months to carry Iranian oil even if they are insured in Europe. Frontline Ltd., Overseas Shipholding Group Inc. and owners of at least 100 supertankers said last month they would no longer call at Iranian ports because of the insurance ban.
The International Group has pressed the EU to grant an exemption for insurance against crashes and pollution, Andrew Bardot, the organization’s secretary and executive officer, said last week.