EU Allows Iran Oil Insurance For Now

The European Union agreed on Friday to exempt until July 1 some insurance on Iranian oil shipments headed for destinations other than Europe from its embargo on crude trade, and to decide before the middle of May whether to allow cover after that date.

The exemption and its planned review was agreed by EU foreign ministers at a meeting in Brussels as part of a package of rules on the implementation of the EU’s oil embargo against Iran.

It will allow customers who are not prevented from buying Iranian crude by Europe’s embargo, which started coming into effect in steps in January, to obtain third-party and environmental liability cover from European insurers.

This exemption will make it easier for buyers in Asia to insure shipments, because the majority of the world’s tanker fleet is covered by European companies.

“I think where we’ve got to on the insurance is the right place and we have a process that will now take place,” EU foreign policy chief Catherine Ashton said after the meeting in Brussels.

EU capitals agreed in January on an oil embargo as part of efforts to pressure Iran to curb nuclear work many Western countries fear is aimed at making atomic bombs.

Tehran denies its programme has military purposes and says its uranium enrichment aims to boost power supply.

As well as stopping EU states from importing Iranian crude, the embargo banned European companies from transporting, purchasing or insuring crude and fuel originating in Iran and intended for anywhere in the world.

That decision had raised concerns by buyers such as Japan and Korea that their shipments would go uninsured, driving them to lobby Europe for exemptions.

But discussions on the issue proved difficult, with European capitals divided over how to implement the oil embargo. Any extention of the exemption could be tough to achieve, EU diplomats say.

“There are differences of opinion and any change would have to be unanimous,” one EU diplomat said.

Some EU states, such as Britain, had pushed to exempt some cover for Iranian crude headed outside Europe, arguing this would help stabilise world crude prices, diplomats said.

But other governments, which had had to sacrifice lucrative contracts with Iran to comply with sanctions, had lobbied against exemptions, EU diplomats said.

Under the embargo, EU buyers with existing contracts to import crude from Iran can continue with them until July 1. Insurance on such purchases is allowed, new contracts are not.

Separately, EU governments agreed on Friday to add 17 people to a list of Iranians targeted by EU asset freezes and travel bans because of their involvement in human rights abuses.

The sale of telecommunications equipment to Iran that could be used for repression, for example to monitor or intercept internet and telephone communications, was also banned.