Chinese Insurer Refuses to Cover Iranian Oil

Chinese refiners – who consume 20% of Iran's exportable crude oil – are finding it increasingly difficult to insure Iran's black lucre.

Gabe Kahn,

Oil Tanker
Oil Tanker
Reuters
Key ship insurer the China P&I Club said Thursday that it will halt indemnity coverage for tankers carrying Iranian oil as Western nations tighten sanctions on OPEC's second largest producer.

China is Iran's top buyer of crude and this is the first sign the country's refiners may struggle to obtain the shipping and insurance to keep importing from the Middle Eastern country.

Iran's other top customers – India, Japan and South Korea – are running into similar problems insuring oil shipments from Tehran as the United States and European Union continue to tighten sanctions.

European insurers provide coverage for the majority of the world’s oil tanker fleet. Industry officials say ship owners who can still legally trade with Iran will be hard pressed to find sufficient alternative insurance.

China P&I is not a member of the Group of International P&I Clubs, who provide 95% of all seaborne shipping coverage globally. It had reportedly held out hope that the European Union would decide on a last-minute easing of the sanctions.

Its decision to fall in line is the first sign that refiners in China, Iran’s top crude buyer, may struggle to obtain the shipping and insurance to keep importing from Iran, raising questions on how Tehran will be able to continue to export the bulk of its oil.

Oil prices are up nearly 14 percent since the start of this year on concerns that Iranian supplies may be disrupted due to Western sanctions. Brent crude oil traded above $123 a barrel on Thursday.




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