The country has been providing its own cover for tankers making the shipments and this may not renew.
This month will likely start the cessation of the importing of Iranian crude in Japan as it is allowing its self-provided oil insurance to expire and has not yet established a new way to cover the tankers.
Japan first created its own special shipping insurance coverage to overcome prior sanctions against Iran.
Since the oil insurance is set to expire with the close of March, the country will be ceasing its loading of tankers in Iran that would otherwise have been responsible for shipping the crude to Japan. The country’s government had been providing the insurance coverage for these imports throughout the term of the sanctions that had been implemented by the United States and the European Union. Those restrictions stopped American and European insurers from being able to cover tankers transporting oil from Iran.
However, the oil insurance sanctions have been lifted by the United States in January, changing the coverage scene.
Now that the sanctions have been removed, following the reaching of a deal with regards to the controversial nuclear program in Iran, the exports of the country’s crude oil have started to resume, once again. Japan had been one of the countries that had not stopped the imports from the country as it provided its own insurance coverage for the tankers.
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Now that the Treasury Department in the United States has lifted the ban on reinsuring Iranian oil tankers, the country is exporting a great deal more. The limits showed their most dramatic decrease in the country’s exports when they were first implemented. In 2011, the average exports from Iran had been 3 million barrels per day (bpd). When the sanctions went into effect in 2012, that figure fell to under 1 million bpd.
Japan’s government was able to provide the necessary reinsurance for itself, offering its crude importers $8 billion in oil insurance coverage. This coverage is set to expire at the end of March. While it is likely that the government will renew the coverage, the vote has yet to find its way to a timetable that would allow the coverage to continue without a cessation. Therefore, the country will be ceasing shipments until it can arrange to put that cover back into effect.