Iran is offering to insure oil cargoes to India after some local insurers stopped providing the service in the face of impending US sanctions, industry sources said, a move that would help Tehran continue supplying its second-biggest oil client.
Several refiners in Asia, Iran’s key market for oil sales, are gradually reducing the amount of oil they take from the OPEC member as they want to maintain access to the US financial system when the sanctions kick in.
US President Donald Trump withdrew from the Iran nuclear deal in May, and Washington now plans to reimpose sanctions on Tehran next month. The first round of US sanctions on Iran goes into effect in August, followed by ones targeting Iran’s oil exports in November.
Tehran recently insured oil cargoes to India in tankers operated by National Iranian Tanker Company (NITC) as the threat of sanctions hits the supply of both ships and insurance for transportation, said the sources, according to Reuters.
India’s top refiner Indian Oil Corp (IOC) and the second biggest state refiner Bharat Petroleum Corp have started lifting Iranian oil in NITC-owned vessels with the cargoes covered by Iranian insurance, they added.
IOC, which planned to buy as much as 180,000 bpd of oil from Iran in 2018/2019, last week lifted oil in Very Large Crude Carrier Devon after United India Insurance refused to provide cover for the shipment, an industry source said.
The source said IOC is seeking to buy August cargoes from Tehran on similar terms, with Iran responsible for the delivery to Indian ports.
A source at United India Insurance confirmed the company has stopped providing insurance cover for Iranian cargoes.
State-run insurers rely on reinsurance from India’s General Insurance Co (GIC), which in turn depends on companies in both Europe and the US to hedge its risk.
A third source said Tehran’s Bimeh Iran is providing insurance for oil cargoes while NITC has its third party liability insurance and pollution cover from the International Group of P&I Club.
Fears of losing insurance cover led to Hindustan Petroleum Corp canceling its oil shipment in early July.
(Source: Tasnim, under Creative Commons licence)