NEW DELHI/SINGAPORE: Indian oil buyers are asking Iran to bear the insurance risk for transporting its crude as tighter Western sanctions make it more difficult to buy Tehran’s principal export, industry sources said on Wednesday.
The number of maritime firms willing to transport Iranian crude has dwindled significantly since the European Union announced in January it would proceed with an oil embargo, leaving Asian oil buyers to rely more on Iranian-owned tankers.
With Indian shipping firms uncertain whether they can continue transporting Iranian oil, state-run Indian Oil Corp and Hindustan Petroleum Corp have written to the National Iran Oil Corp (NIOC) asking the company to take on the insurance risk for their crude shipments, two industry sources said.
NIOC has indicated it may consider the request on a case-by-case basis, the sources said.
The United States has also imposed tougher sanctions against Iran for its disputed nuclear programme, prompting Japan and 10 EU nations to significantly cut purchases of Iranian crude oil in order to win exemptions.
Washington, however, has left Iran’s top customers China and India exposed to the possibility of such steps.
The EU agreed to an oil embargo on January 20 to stop members from importing Iranian oil from July. The embargo also specified a ban on EU insurers and reinsurers from indemnifying vessels carrying Iranian crude and fuel anywhere in the world.
Europe’s insurers cover the majority of the world’s global oil tanker fleet, and the ban could prevent Iran’s biggest crude buyers in Asia from importing Iranian crude.
“Shipping companies are having a problem obtaining enough insurance, in particular in respect of liability coverage, providing the minimum $1 billion coverage to call at foreign ports,” said a top shipping executive familiar with the matter.
EU diplomats were divided on whether to exempt some insurers from the ban after Asian oil importers lobbied for exceptions to ensure oil deliveries. Negotiators hoped to reach an accord before a meeting of EU foreign ministers on Friday.
An increasing amount of Iranian crude oil was being transported by the country’s own fleet, reflecting the narrowing field of shipping firms willing to operate in the Islamic Republic.
Iran’s leading tanker operator, NITC, has a total of 14 ships scheduled to load at the country’s largest crude export terminal at Kharg Island in the last two weeks of March, according to shipping data obtained by Reuters.
That is the highest number of NITC vessels to load over a two-week period so far this year, and more than triple the amount from January.
“If NITC is busier than usual, it is probably because many foreign shipping companies are reluctant to go there,” said the shipping executive.
A second top maritime executive said he believed Iran was being forced to ship more crude because the country’s storage facilities were nearly full.
NITC was currently using at least four supertankers, each capable of carrying 2 million barrels of crude, to store oil. That was double the amount a month ago, according to Reuters shipping data.