Israel Matzav

Key Chinese insurer to stop insuring Iranian oil shipments

A key Chinese insurer has announced that it will stop insuring Iranian oil shipments... starting in July.

Will that be too late? Key ship insurer the China P&I Club will halt indemnity coverage for tankers carrying Iranian oil from July amid tightening Western sanctions against OPEC's second largest producer, two club officials told Reuters on Thursday.

This is the first sign that refiners in China, Iran's top crude buyer, may struggle to obtain the shipping and insurance to keep importing from the Middle Eastern country. Iran's other top customers -- India, Japan and South Korea -- are running into similar problems, raising questions on how Tehran will be able to continue to export the bulk of its oil.

The China P&I Club, whose members include major Chinese shipping firms Sinotrans and COSCO Group , is the first Chinese maritime insurer to confirm it will halt business with tankers operating in Iran, following similar action in Japan.

"Many ship owners want to join our club and want our club to cover this risk, but considering all these regulations from the United States and the EU, I know the China P&I club will not do that," said a Hong Kong-based official with the insurer, which provides coverage to more than 1,000 vessels.

"The China P&I club will not take the risk. We have asked our members not to go there, if they go there, they take their own risk," the official added.

Starting in July, European insurers and reinsurers will be barred from indemnifying ships carrying Iranian crude and oil products anywhere in the world, in line with sanctions on Tehran.

Iran sells most of its 2.2 million barrels per day of oil exports in Asia, where China, India, Japan and South Korea are the four biggest buyers. They have either made a cut in imports or pledged to do so in the face of growing sanctions pressure by the West intended to compel the Islamic Republic to halt its disputed nuclear program.

...

It was not clear if other Chinese ship insurers were also planning to reduce tanker coverage.

"I really don't know what will happen," said a Beijing-based Chinese industry official. "We are talking about $1 billion (per tanker). No single insurance company can handle that."

China P&I Club is not a member of the Group of International P&I Clubs, an association of customer-owned ship insurers which cover 95 percent of the world's tankers against pollution and personal injury claims. The Chinese insurer has applied to join the club and could become a member as early as February 2012, industry sources said.

February 2012 was two months ago....

But I'm not sure any of this matters. I suspect we have reached a point where Iran could decide to gut it out and just tell the world in a few months that they're stopping because they're already a nuclear power. They may figure (perhaps even correctly) that once they already have weapons, there will be less of an incentive to sanction them, at least so long as the weapons are not in use.

What could go wrong?

Labels: China, Iran sanctions regime, Iranian nuclear threat, Iranian oil

posted by Carl in Jerusalem @ 12:12 PM