Insurance for tankers to export Iranian crude may be unusable even after the U.S. and the European Union eased sanctions against the Persian Gulf state, a group covering vessel owners said.
Ship owners hauling Iran’s oil may go unpaid if they claim against insurance policies after July 20, the date temporary relief of sanctions on the nation is due to expire or be renewed, Gard AS, an Arendal, Norway-based organization covering against risks including oil spills, said in an update on its website today. The Office of Foreign Assets Control, part of the U.S. Treasury, declined to clarify whether claims would be recoverable after July even if the incident happened before then, Gard said.
The U.S. and its allies agreed to ease some sanctions against Iran for six months starting Jan. 20, part of a deal designed to curb the Middle East country’s nuclear program. The relaxation included suspending an EU insurance and reinsurance ban that had barred most international tanker owners from getting coverage to carry Iranian oil. The EU prohibition helped limit Iran’s oil exports, which the U.S. estimated fell 60 percent since the measures started in 2012.
“This ongoing insurance-claims ambiguity places a cautious cloud on the willingness of carriers to ply this route, eventually restricting the pace of growth in Iranian oil exports during this six-month window,” Miswin Mahesh, an analyst at Barclays Plc in London, said by e-mail today.
Hagar Chemali, an OFAC spokeswoman, declined to comment.
The U.S. estimates that Iran is exporting 1 million barrels a day and says the nation cannot expand sales beyond that figure under the deal, which was negotiated in November in Geneva. Iran’s own estimate for sales was about 1.5 million barrels a day in November, according to a submission by the country to the Joint Organisations Data Initiative. U.S. officials say the Iranian estimate is inflated.
Andrew Bardot, the executive officer of the International Group of P&I Clubs, a London-based umbrella organization that includes Gard as a member and covers 95 percent of the world’s tankers, said before the easing of the EU ban that OFAC was “on the same track” as the European Commission concerning relaxing the measures.
“Members and clubs should proceed on the basis that beyond 20 July 2014, clubs will not be able to respond to any claims presented in respect of liabilities arising during the 20 January/20 July suspension period,” Gard, the largest P&I provider, said in its notice. “This has the effect of rendering the current suspension of sanctions on insurance cover, and in particular P&I cover, of very limited, if any, value to shipowners.”
P&I refers to protection and indemnity insurance. Club members are owners who pool resources to cover vessels.