(Updates with European Union confirmation in second paragraph.)
Jan. 16 (Bloomberg) -- Europe is days from suspending a ban on reinsuring tankers hauling Iranian oil, a measure that helped cut the nation’s crude exports by more than 50 percent when it was implemented.
The six-month relaxation starts Jan. 20 and will allow companies following European Union law to reinsure tankers shipping Iran’s oil to India, China, Japan, South Korea, Turkey and Taiwan, an EU official told reporters in Brussels today, speaking on condition of anonymity because he wasn’t authorized to be quoted by name. The step affects most of the world fleet because 90 percent of all merchant vessels are covered by members of the London-based International Group of P&I Clubs.
Iran’s oil exports plunged to about 1 million barrels a day last year from 2.5 million before sanctions started in 2012, according to the White House. The plan to ease the reinsurance ban was agreed in November, following negotiations between Iran and world powers seeking to curb the nation’s nuclear program. European companies are still barred from purchasing Iranian oil and the accord in Geneva doesn’t allow the Persian Gulf state to boost exports.
“Countries that were finding it difficult to lift their existing quotas of oil will be able to lift the oil that they are permitted to lift easily,” Abhishek Deshpande, an analyst at Natixis SA in London, said by e-mail. Still, buyer states must avoid increasing imports so that they don’t breach U.S. rules that remain in force, he said.
OFAC on Track
Entities designated for sanctions are still barred from buying coverage, Andrew Bardot, the London-based executive officer of the International Group of P&I Clubs, said by e-mail today. The U.S. Treasury’s Office of Foreign Assets Control is “on the same track” as the European Commission, Bardot said, citing talks with both organizations.
The International Group is a claims-sharing pool for insurance mutuals around the world. Its members must follow EU law to be part of the group and they cover most of the world’s merchant ships for risks including oil spills. The commission is the European Union’s executive arm.
Europe’s ban hindered shipments to countries including India. Indian Oil Corp. and two other state-run refiners said this month they would defer resuming purchases of Iranian crude by at least three months, having failed to obtain reinsurance for shipments.
The EU will relax the ban on Jan. 20, once the International Atomic Energy Agency has certified the conditions in the November agreement have been met, the official said.
--With assistance from Lananh Nguyen in London. Editors: Dan Weeks, Stephen Voss