February 19, 2016
The great fear in the oil trade that Iranian crude would not be able to be moved freely because the Americans would block shipping insurance has been removed as the US Treasury has authorized such insurance for Iran.
A US-based insurer to the global shipping industry said it got US government authorization to cover non-American companies transporting oil from Iran.
The Treasury Department’s Office of Foreign Assets Control (OFAC) removed the restriction February 5, but word of that did not circulate for a week.
The previous restriction prevented the “American Club” from providing cover for Iranian cargoes, the New York-based insurer said in a circular on its website. The club can now insure foreigners—but not Americans—who are transporting crude and products to and from Iran, the notice said.
In terms of Iranian exports, insurance “is where the biggest problem has been and now that seems to have been resolved. At least that’s one problem out of the way,” Erik Nikolai Stavseth, a shipping analyst at Arctic Securities ASA in Oslo, told Bloomberg news.
The American Club is one of 13 members of the International Group of Protection and Indemnity Clubs in London, who collectively cover more than 90 percent of the global tanker fleet against risks, including oil spills. The International Group said just before sanctions were lifted against Iran that US curbs were still causing obstacles to its members’ ability to cover Iranian cargoes.
There has been much talk since sanctions were lifted January 16 that continued US insurance restrictions could be a major drag on Iran’s ability to sell its crude.
When the US lifted sanctions against Iran in January, it lifted the general sanctions that kept non-US companies from doing business with Iran. But sanctions on US companies remain in place. That kept the American Club from joining in the re-insurance of Iranian cargoes. And since such re-insurance is all intermingled internationally, the US restriction put the brakes on re-insurance generally.
However, trading giant Vitol said last week it already had insurance for Iranian oil cargoes, and several European oil companies have already chartered tankers for Iranian crude. But Lukoil’s trading arm, Swiss-based Litasco, canceled its booking of an Iranian cargo to Italy over insurance complications, according to Reuters.