The South Korean Economy Ministry says Seoul and Tokyo have asked the European Union to extend insurance contracts on tankers carrying Iranian crude after the bloc’s oil embargo comes into effect on July 1.
“To the EU members, we explained the problems that could be caused to non-EU members by the EU insurance embargo,” the ministry said in a Monday statement. “In close cooperation with Japan, we are in the process of discussing this with the EU.”
On January 23, the European Union approved new sanctions on Iran’s oil and financial sectors. The sanctions are meant to prevent EU member states from buying Iranian crude or doing business with its central bank. The sanctions will come into force as of July 1.
Additionally, the embargo banned European companies from transporting, purchasing or insuring crude and fuel originating in Iran and intended for anywhere in the world.
Jae-do Moon, the deputy minister for international affairs at the Korean Economy Ministry said Seoul would take steps to avert a possible disruption in Japan’s imports of Iranian crude oil from July 1, but gave no details.
“It will be hard to find entities to provide alternative insurance coverage to European P&I (protection and indemnity),”Moon said on Monday.
South Korea and Japan are major Asian importers of Iran’s oil.
Iranian crude accounted for 8.8 percent of the total Japanese oil imports in 2011, while South Korea imports around 10 percent of its crude from Iran.
Earlier in March, under pressure from Asian oil importers, the EU agreed to provide some insurance on Iranian oil shipments.
The agreement allows buyers outside the EU to purchase third-party and environmental insurance on their shipments from European insurers, who cover most of the world’s tanker fleet.
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