If European powers are to succeed in holding together a nuclear deal with Iran that the U.S. abandoned a week ago, then one issue they’ll need to consider is the insurance of oil tankers hauling the Persian Gulf country’s crude.
From early November, U.S. sanctions will likely prevent members of the International Group of P&I members from covering the global tanker fleet against risks including spills if they’re moving oil to or from Iran, Mike Salthouse, the chair of a sanctions committee for the IG Group, said.
International Group-backed cover is considered standard in the vast majority of charter contracts for oil shipments because it means everybody in the supply chain knows that many billions of dollars backstop the insurers and reinsurers who’d pay out in the event of a claim. As things stand, it’s likely such coverage will be curtailed “or stopped altogether” for Iranian cargoes in November, Salthouse said.
Foreign ministers from the U.K., France and Germany are due to sit down with their Iranian counterpart, Javad Zarif, in Brussels on Tuesday to discuss how to move forward. European Union leaders will then take up Iran at an informal dinner in Sofia the following day.
If Salthouse’s analysis is how it plays out, then expect to see governments — both Iran’s and its client states — seeking creative solutions. Last time around, those in Asia set up sovereign insurance entities while Iran provided more cover too.
The International Group is communicating with the U.S. Treasury’s Office of Foreign Assets Control and the European External Action Service, and “will be using those to obtain more clarity for ourselves and our members,” said Salthouse.
He’s also the deputy global director of claims at North P&I Club, one of 13 members of the International Group, and an insurer of about one in every eight of the world’s ships.