Oil tanker owners are facing a nervous wait to find out whether they can carry on doing business with Iran after President Trump said on Tuesday he was reinstating a raft of sanctions against the country.
The return of sanctions is likely to have “significant ramifications” for maritime trade with Iran, International Group of P & I Clubs, an umbrella organisation whose members cover 90 per cent of the global tanker fleet against risks including oil spills, said on Wednesday. Those impacts will only become apparent once America’s partners give their own response to Trump’s decision, and when details of how the US measures are implemented are clear, the IG said.
Ship insurance was a critical hurdle when sanctions were previously imposed on Iran because tanker operators couldn’t obtain the level of cover that’s considered standard across the oil industry. It meant most owners weren’t able to haul Iranian oil and forced some Asian buyers of the Middle East country’s crude to find awkward workarounds such as state-backed cover.
“It’s going to take some time before we can ascertain what the impact will be, because we’re going to have to wait and see what the response will be from Europe and how aggressive the US will be,” Brian Gallagher, head of investor relations at Euronav NV, one of the world’s largest tanker owners, said by phone. As of now, there’s yet to be a step change in owners’ approach to Iranian business, he said.
Situation remains fluid
When the US imposed sanctions on Iran in 2012, accompanying European measures also restricted the International Group — which is based in London — from providing cover for Iranian shipments. That effectively shut the country’s own fleet out of the main ship-insurance market as well as international owners if they wanted to lift the Islamic republic’s crude. It’s not yet clear what path Europe will take this time.
Three of the main providers of cover to Iran’s main tanker fleet — Skuld, the Swedish Club and West of England Club — said they didn’t want to give any further guidance beyond what they published on their websites, saying the situation remains fluid.
“The snapback of US sanctions will have a major effect on shipowners and their insurers and Skuld and the IG are closely monitoring developments,” Skuld said on its website. The West of England Club said any activity would have to stop the moment any entity that’s dubbed a Specially Designated National by the US. Treasury’s Office of Foreign Assets Control is re-added to a secondary sanctions list. “Should US reinstate its extraterritorial sanctions, that may have significant adverse impact on the ability for non-US persons to trade with Iran and Iranian interests,” the Swedish Club said.