Japanese insurer P&I club has instructed ship owners to alert the maritime insurer in advance of any plans to transport Iranian oil and petrochemicals that breach US-led sanctions on Tehran.
Western countries have tightened punitive measures aimed at Iran’s oil trade. Washington and Brussels insist stemming the flow of petrodollars to Iran is intended to dent its nuclear programme and atomic weapons production.
The EU has ordered all european insurers and reinsurers not to indemnify ships carrying Iranian petrochemicals anywhere in the world from May, and crude and oil products from July.
Japan’s P&I Club provides insurance for shipping companies and does not directly fall under the sanctions regime. However, the company heavily depends on the European reinsurance market to hedge its risk.
The Japanese ship insurer said it wanted to know in advance if any member is sending a tanker to transport Iranian oil because the insurer had the right to refuse coverage.
“The member shall conduct any such voyage in the full knowledge of the risk that the club may lawfully cancel the contract of insurance or decline to pay claims,” the club said in a circular to its members on Tuesday.
The insurer, whose clients include shipping firms like Kawasaki Kisen Kaisha, Mitsui O.S.K. Lines, and Idemitsu Tanker Co, insists it could provide coverage worth a maximum $8 million for a tanker carrying Iran oil and petrochemicals, down from the typical $1 billion coverage.
“Any reinsurers including other (P&I clubs) subject to EU legislation will not be able to pay out if a claim involves a sanctioned cargo,” the club said. “Because of this, the member could suffer a significant shortfall if any claim is made.”
Despite US announcement that Japan is doing enough to support oil embargo on Iran, the country’s refiners have been reducing Iranian crude imports since April.
Japan has done all it can to impress its biggest ally in the world by cutting down Iranian crude purchases despite its dire need for more oil to help meet rising domestic demand after the earthquake, tsunami and nuclear disaster in March 2011.