Britain is seeking to persuade fellow European Union members to postpone by up to six months a ban on providing insurance for tankers carrying Iranian oil, arguing that it could lead to a damaging spike in oil prices, European diplomats said.
A European Union ban on importing Iranian oil, which takes effect on July 1, will also prevent EU insurers and reinsurers from covering tankers carrying its crude anywhere in the world. The impact of the measure is likely to be felt strongly in London's financial district, the centre for marine insurance. Iran exports most of its 2.2 million barrels of oil per day to Asia. The four main buyers - China, India, Japan and South Korea - have yet to find a way to replace the predominantly Western insurance shipping cover provided by London insurers.
"Britain will be pushing the EU to postpone the ban on P&I insurance by six months," said one diplomatic source. He said Britain feared oil prices could rise sharply as a result of disruptions caused by the lack of insurance after July 1, as Japan and South Korea would be forced to bid aggressively for alternative supplies to meet their needs. A second European diplomatic source said he was aware of the British initiative.Both sources said Britain's proposal had yet to win support from other EU members, including France, which has been pushing for the toughest stance on Iran.But in Asia, some shippers welcomed the proposal. "A six-month delay would give more time for alternative arrangements to be made or for the situation to become clearer," said Arthur Bowring, managing director of the Hong Kong Shipowners Association and a supporter of Britain's actions.