Coverage bans show that Japan is in and India is out
The insurance news regarding the European Union’s ban on coverage for Iranian oil tankers has just experienced another update, as Japan has approved their own policies, while India has announced that they are aligning with the EU’s decisions.
The Cabinet in Japan has just approved a bill to offer sovereign coverage to tanker operators importing crude from Iran.
Operators that import Iranian oil before the sanctions from the European Union against this nation go into full effect will now be able to obtain coverage during that time. The Japanese government has announced, through the transport ministry, its intentions to insure ship owners and petroleum refiners, as they will be losing their access to the reinsurance marketplace in Europe following the EU embargo that includes 27 members and that becomes effective at the start of July 2012.
When the European Union’s ban becomes fully effective, it will apply to all exports of crude from Iran as well as the coverage of the oil shipments. This insurance news will mean that all but 5 percent of the world’s tankers will no longer have coverage if they carry product from that country, since they are all insured by the International Group of P&I Clubs’ 13 members, based in London.
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Similarly, President Barack Obama signed a law on December 31, 2011, which ceases the access that any country has to the American financial system if they are unable to demonstrate that they have been decreasing their Iranian oil imports. There are 10 European countries, as well as Japan, which had received exemptions from this rule as of March, for a renewable period of 180 days.
The reason for the embargo by the European Union, is an effort to pressure Iran into ceasing its nuclear program, which both the E.U. and the U.S. claim is meant for the production of weapons.
At the same time, India has made insurance news, saying that their state-owned refiners will no longer be continuing with their planned oil 173,000 daily imported barrels from Iran, beginning on the date that the sanctions from the E.U. take effect.