Barring an unlikely last-minute deal to soften EU sanctions, Europe's Protection and Indemnity (P&I) clubs will be unable to insure vessels carrying Iranian crude from July 1, as a result of sanctions to punish the government for its nuclear programme.

The looming ban has sent Iranian crude customers scrambling for alternative cover, with Japan's lower house set to pass a bill on Friday to provide insurance and India studying offering sovereign insurance to its refiners.

Now private Iranian insurance companies have clubbed together to offer coverage for ships and oil tankers sailing in Iranian waters, the head of Iran's insurance regulator said.

"When international insurance companies began refusing to insure ships carrying Iran's oil, domestic companies formed a consortium to fill that void," Fars quoted Seyed Mohammad Karimi as saying on Tuesday.

Fars said there were 24 privately owned insurance companies in Iran.

Western governments believe Iran has been trying to develop nuclear weapons, charges denied by Iran which says its programme is limited to energy.

The insurance impasse could significantly reduce the amount of oil OPEC's second-largest supplier sells as overseas oil companies cannot afford to take the risk of multibillion-dollar liabilities arising from an uninsured incident or potential hijacking by pirates.