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Iran: Sanctions re-imposed by the US to affect shipping insurance

Source: Middle East Insurance Review | Jun 2018

The re-imposition of US sanctions against Iran, following President Donald Trump’s announcement that the US was withdrawing from a nuclear treaty with the Persian Gulf country, is likely to have ‘significant ramifications’ for maritime trade with Iran, and the insurance of such trade.
 
   This is the view of International Group of P&I Clubs (IG), an umbrella organisation whose members cover 90% of the global tanker fleet against risks such as oil spills.
 
   The impact of the sanctions will only become apparent once America’s partners give their own response to Mr Trump’s decision, and when details of how the US measures are implemented are clear, the IG said.
 
   Ship insurance was a critical hurdle when sanctions were previously imposed on Iran because tanker operators could not obtain the level of cover that is considered standard across the oil industry, reported Bloomberg. It meant most owners were not able to haul Iranian oil and forced some Asian buyers of the Middle East country’s crude to find awkward workarounds such as state-backed cover.
 
   “It’s going to take some time before we can ascertain what the impact will be, because we’re going to have to wait and see what the response will be from Europe and how aggressive the US will be,” Mr Brian Gallagher, head of investor relations at Euronav NV, one of the world’s largest tanker owners, was quoted as saying by Bloomberg.
 
   When the US imposed sanctions on Iran in 2012, accompanying European measures also restricted the London-based IG from providing cover for Iranian shipments. That effectively shut the country’s own fleet out of the main ship insurance market as well as international owners if they wanted to lift the Islamic Republic’s crude. It is not yet clear what path Europe will take this time.
 
Impact of US pullout from nuclear deal 
All of the Iran sanctions in place before the 2015 agreement are now officially back in force, banning any new deals with Iran, after President Trump’s decision to withdraw from the landmark Iran nuclear deal and vow to re-impose sanctions against Iran.
 
   However, Mr Trump’s order sets 90- and 180-day time frames for companies with existing Iranian business commitments. By August or November, they will have to comply with a broad array of sanctions targeting the Iranian Central Bank and Iran’s financial sector, oil industry, shipping and other economic pressure points, reported Bloomberg. That could allow time to negotiate a new accord to replace or supplement the deal agreed to during Barack Obama’s presidency. M 
 
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