Tough new European Union sanctions aimed at stopping Iran's oil exports to Europe also ban EU insurers and reinsurers from covering tankers carrying Iranian crude anywhere in the world. Around 90 percent of the world's tanker insurance is based in the West, so the measures threaten shipments to Iran's top Asian buyers China, India, Japan and South Korea. Global crude oil prices have risen nearly 20 percent since October, partly on fears over supply disruptions from Iran. "(Ship) operators are worried that if the insurance issue cannot be resolved, they will not be able to take orders for shipping Iranian oil any longer," Zhang Shouguo, secretary general of China Shipowners' Association, told Reuters in a rare interview with foreign media. "We have put forward our concern and related government departments are studying the issue."
Iran, OPEC's second-largest producer, exports most of its 2.2 million barrels of oil per day to Asia, and major buyers have yet to find a way around pending EU sanctions. "We are paying great attention to this, the country has the need for oil and it's our responsibility to move the crude," said Zhang. "But we need a solution from the government so we can avoid such risk." Like China, India and South Korea were also mulling sovereign guarantees for their tankers. Indian shipping firms indicated last week they would continue to transport Iranian oil even if limited insurance cover exposed them financially to a spill or accident. Chinese insurers and ship-owners would not take the risk on themselves and government intervention was necessary, Zhang said. Major ship insurer, China P&I club, told Reuters earlier this month it would not provide replacement cover for domestic tankers carrying Iranian oil. Most of China's tanker fleet, owned by firms such as China Shipping, COSCO Group and Nanjing Tankers , were covered by European insurers, analysts said.
Most maritime insurers pool their coverage and tap into the reinsurance market when coverage exceeds $8 million. A typical supertanker - the biggest can ferry some 2 million barrels of oil - is covered for $1 billion against personal injury and pollution claims. Several government departments were considering the industry's request, including the Ministry of Finance, China Insurance Regulatory Commission, Ministry of Transport and National Development and Reform Commission (NDRC), Zhang said. He did not say when a decision might be made. Until recently, China was Iran's top customer, taking more than 20 percent of its crude exports but customs data last week showed China halved its Iranian crude imports in March compared with the same month in 2011.