European Union governments reached a preliminary agreement on Thursday to allow some insurance on Iranian oil shipments before the EU's full embargo on Tehran's crude starts on July 1, an EU diplomat said. The decision, which is expected to be formally approved by EU foreign ministers in Brussels on Friday, should make it easier for big oil customers in Asia to import Iranian crude.
Japan and South Korea have lobbied European governments for an exemption on insurance restrictions since the bloc's 27 governments agreed an oil embargo in January, because of their heavy reliance on European insurance services. That decision aimed to stop EU states from importing crude, and put a ban on European companies transporting, purchasing or insuring crude and fuel originating in Iran and intended for anywhere in the world, as part of western efforts to pressure Iran over its suspected nuclear weapons programme.
Thursday's decision will open way for buyers outside the EU to purchase third-party and environmental insurance on their shipments, said the EU diplomat, who spoke on condition of anonymity and has close knowledge of discussions on the issue.
"Certain insurance is allowed until July 1," the diplomat said, adding that EU capitals had also agreed to review the decision before a meeting of EU foreign ministers scheduled for May 14. In response to concerns from Asian countries, EU envoys have met over the last few days to discuss possible exemptions but failed to reach an agreement until Thursday, in part because of opposition from Britain, diplomats said. Some diplomats said Britain, where most of insurance firms that cover tanker fleet are located, had wanted an open-ended exemption.
Under the January embargo decision, EU governments with existing contracts to import crude from Iran can continue fulfilling them until July 1. Insurance on such purchases is also allowed, but no new contracts can be made. Rising international political tension between the West and Iran and uncertainty over how the EU embargo and US sanctions will impact oil supplies have driven up benchmark crude prices. So Iran is receiving a higher price for its exports, while importers such as Japan and South Korea face a rising fuel bill.
Some European diplomats have argued that such price increases were also a threat to Europe's economy, damaged by a two-year debt crisis. They have said discussions over how to implement the ban should take into consideration economic costs, as well as the need to ratchet up pressure on Tehran. Iran denies Western charges over its nuclear programme, saying it is for peaceful purposes such as power generation.
Comments
Comments are closed.