Japan’s Cabinet approved a bill to provide sovereign insurance to tanker operators that import Iranian oil before the full implementation of European Union sanctions against the Persian Gulf nation.
The government plans to take over coverage for ship owners and petroleum refiners because they will lose access to Europe’s reinsurance market after the 27-member EU embargo goes into effect July 1, the transport ministry said today in a statement.
The full EU ban covers Iranian crude exports and insuring shipments of the oil. The prohibition means 95 percent of the world’s tankers will lose insurance if they carry cargo from the Gulf state as they’re covered by the 13 members of the London-based International Group of P&I Clubs. A law signed by President Barack Obama on Dec. 31 blocks countries’ access to the U.S. financial system if they can’t show they’re reducing oil imports from Iran. Japan and 10 European nations received exemptions in March for a renewable period of 180 days.
The EU introduced the embargo against Iran in an attempt to get the country to halt its nuclear program, which the states and the U.S. allege is for weapons production. The government in Tehran faces four sets of United Nations sanctions in an effort to get the Gulf state to stop enriching uranium.
Japan imported 362,000 barrels a day of crude from Iran in 2010, making it the country’s second-largest buyer, after China, according to data from the U.S. Department of Energy.
Japan’s Cabinet will submit the legislation to the Diet, or national parliament, for approval.