Despite insurance coverage, South Korea nixes Iran oil purchases
In insurance news headlines today, South Korea has halted its purchases of oil from Iran as the countries refiners lose access to their insurance coverage due to sanctions from the European Union. The EU instituted sanctions against Iran were enacted earlier this year and prevent ships carrying Iranian oil from receiving insurance coverage. The maritime insurance industry, much of which is represented by the United Kingdom, expressed concerns over the sanctions but quickly complied as the measures were enacted. South Korea has intended to continue purchasing oil from Iran, but has since revised this stance.
South Korea able to insure oil shipments due to compliance with US guidelines
South Korea, along with other Asian countries, would not have suffered any political backlash from purchasing Iranian oil. This is because the country’s need for the fuel outweighs its ability to comply with the EU sanctions. The U.S., chief advocate of the sanctions against Iran, supported South Korea’s aim to continue receiving oil because the country has promised to significantly reduce the amount of oil it purchases. South Korea has originally planned to provide insurance coverage for ships carrying Iranian oil itself.
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Other Asian countries continue to rely on Iranian oil
Iran has offered to provide insurance coverage for ships transporting oil, but relatively few countries are keen to take up the offer. Iranian oil remains a significant source of energy for some Asian countries, however, which have shown eagerness in ensuring shipments of oil continues unmitigated. India and Japan, both of whom are working to comply with U.S. guidelines, have offered insurance coverage for ships carrying Iranian oil in order to maintain a constant flow of energy.
South Korea turns to alternatives and finds new oil supply
Iran represented approximately 9.4% of South Korea’s oil purchases last year. The country has completely halted its purchases of Iranian oil, bringing Iran’s share immediately down to 6.3% for the first eight months of this year. South Korea will not be purchasing more oil from the country for the remainder of this year or for the foreseeable future. Instead, the country has acquired a new source of oil and has also begun putting more focus on other forms of energy.