Sanctions and Embargo against Iran
Tagged: embargo, insurance, Iran, oil, reinsurance, sanctions
On 1 July 2012, Iran will see the new US sanctions and the EU Oil Embargo come into force, the combination of which will make it increasingly difficult to obtain insurance and reinsurance for any contracts that involve Iranian oil.
US Sanctions
The United States National Defense Authorization Act was designed to increase the pressure on Iran by imposing sanctions on countries which purchase Iranian oil. It was drafted so that the US government could issue exemptions that last for 6 months for countries that took steps to reduce their trade with Iran.
Based upon publicly available information there are 23 countries trading with Iran and to date the US has granted exemptions to 18 of them due to their efforts in reducing their oil trade with Iran.
The exempted countries are:-
Belgium, the Czech Republic, France, Germany, Greece, India, Italy, Japan, Malaysia, the Netherlands, Poland, Republic of Korea, South Africa, Spain, Sri Lanka, Turkey, Taiwan and the United Kingdom.
China is one of Iran’s largest oil importers and has not been granted an exemption. As of yet, we do not know what action the US government will take once the Act comes into force.
EU Embargo
The EU imposed an embargo on Oil/Petroleum and petrochemical products in January 2012 but the implementation of it was staggered with Petrochemical products banned from 1 May 2012, and Oil and Petroleum products banned from 1 July 2012. The staggered start dates gave sufficient time for European countries to find alternative suppliers.
There had been media speculation that the Oil and Petroleum ban would contain exemptions for P&I and environmental coverage but the EU energy commissioner has now confirmed that the ban will come into force as planned.
The EU ban will make it illegal for any European citizen or entity, regardless of where they are based, to be involved in any contract involving oil that originates from Iran irrespective of where the oil is currently located. The ban includes importing/exporting, transporting , financing and insurance/reinsurance contracts.
If you have any questions or concerns in relation to the sanctions and embargo, please contact us. Please also be aware, international regulations are constantly changing and updates provided are by no means exhaustive.
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