Despite the fact that the sanctions against Iran have been lifted, the country will be keeping its sovereign coverage.
Now that the sanctions against Iran are being lifted, it means that there will be considerably greater oil insurance offerings available to countries that want to purchase their crude from Tehran, but Japan has decided that it will be maintaining its own sovereign coverage.
The current situation in the industry is improving the uncertainty with regards to being able to obtain coverage.
With the lifted sanctions, oil insurance protection will, once again, be offered by companies in the United States and European Union. This means that the Japanese government could have the chance to select coverage from outside of itself, as it has been self-insuring to be able to continue purchasing crude from Iran. That said, it looks as though the country will be keeping up its current coverage program. To do so, it will likely have to obtain parliamentary approval if it wants to extend the current coverage beyond March.
Japan had been providing oil insurance coverage to support its crude importers throughout the sanctions.
This coverage was for oil tankers transporting crude that found its source in Iran. For years, Western countries have imposed sanctions that disintegrated the ability of most private insurance companies to be able to cover the tankers. This occurred as a result of the controversial nuclear program in Tehran. Many of those sanctions – including the oil tanker insurance sanction – have now been lifted. This has made it possible for non-American companies provide insurance coverage, as well.
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The sanctions have been lifted now that it appears that Iran has complied with the commitments to which it agreed with regards to its nuclear program.
That said, one of the sanctions that does remain in place is that American oil insurance companies remain unable to sell policies that will cover any Iranian shipping. This, according to both a government source and one from Japan P&I Club (JPI), which is the main insurer from that company, as quoted by Reuters. The unidentified government source said that “The sanctions are lifted conditionally so the (government) scheme will continue to be used for the time being,” and added that shippers don’t want to have to take the additional risk of switching back to private insurance companies.