Sanctions could have major impact on the global economy
Iran is currently facing imposing sanctions from the European Union that could have serious economic implications for the country. These sanctions are spurred by Iran’s refusal to put a stop to its controversial nuclear power program, as well as other reasons. The most recent sanctions from the EU will institute an insurance ban, barring companies from providing insurance coverage to ships transporting oil that was produced in Iran. The ban has caused a stir in the world of politics, even for countries not associated with the EU, because it could have a far-reaching economic impact.
UK officials seek to delay insurance ban until 2013
The United Kingdom is the latest country to petition for the delay of the insurance ban. The UK controls much of the shipping insurance market as it is home to the majority of the world’s maritime insurance companies. These insurers have been divided on the issue of the EU sanctions, but the subject has proven to be quite volatile for governments around the world. The UK, in particular, is concerned that the sanctions may lead to a spike in the price of oil, which could be economically disastrous for countries that have a deeply rooted dependence on the fuel. UK officials are pushing for the sanctions to be delayed until 2013.
Iran, and others, seeking intervention from the insurance industry
Iran has been aggressively petitioning insurance companies to disregard the sanctions and provide shipping companies with limited coverage. The largest insurance buyers in Asia – China, India, Japan and South Korea – are currently looking for ways around the sanctions. These countries have also sought the intervention of private insurance companies, hoping that some will sidestep the sanctions in order to provide some amount of protection. The issue is proving to be quite complicated for Japan and South Korea, who have strong relations with the U.S., a primary supported of the EU sanctions.
Sanctions to take effect July 1 unless action can be taken
The EU sanctions are scheduled to be enacted on July 1, 2012. UK officials claim that if the sanctions take effect, the price of oil will grow exponentially, putting enormous financial strain on countries that have not yet developed an energy system that can be used as a substitute for oil.