Japan Overcomes Ban on Iranian Oil
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
The Japanese parliament has passed a bill that would allow government guarantees on Iranian oil imports, effectively bypassing EU-led sanctions aimed at forcing Tehran to abandon its nuclear enrichment programme.
According to a source who spoke to Reuters on the condition of anonymity, the new law will take effect in seven days and will allow Japan to provide insurance coverage of up to $7.6 billion for Iranian oil exports bound for Japan.
The Japanese parliament has passed a bill that would allow government guarantees on Iranian oil imports, effectively bypassing EU-led sanctions aimed at forcing Tehran to abandon its nuclear enrichment programme.
According to a source who spoke to Reuters on the condition of anonymity, the new law will take effect in seven days and will allow Japan to provide insurance coverage of up to $7.6 billion for Iranian oil exports bound for Japan.
Most of this coverage has been offered by the Japan Shipowners’ Mutual Protection & Indemnity Association, which in turn obtains reinsurance from other P&I clubs and other insurers to cover potentially large claims.
EU member states are banned from importing Iranian oil, and EU insurance firms are banned from providing purchasing protection and indemnity insurance for tankers carrying Iranian crude.
The move is seen as a breakthrough for Japan as it imports almost 10 percent of Iranian crude for its energy needs. This is the first the Japan has sought to provide sovereign guarantees on marine shipments, said a Japanese transport ministry official.
Tokyo has promised to reduce its Iranian oil imports by 20 percent this year and in March it received a US exemption from financial sanctions imposed on countries that trade with Iran.
Oil analysts say the ban will force countries such as India, China, South Korea, Singapore, South Africa and Turkey to stop buying Iranian oil. South Korean officials have said they will reduce imports to zero in July due to the ban while Iran’s top buyer, China, has not revealed how it plans to bypass the Western sanctions.
Related News: 11 Nations Exempted From Financial Sanctions on Iran
Related News: Iran Offers Asian Oil Buyers Attractive Credit Terms
Negotiations over Iran’s nuclear programme resumed in Moscow on Monday, but Iran and world powers have failed to narrow their differences and break the deadlocks.
Catherine Ashton, the EU foreign policy chief, said the discussions were detailed and frank, but said diplomacy has failed because of “significant gaps between the substances of the two positions.”
The six negotiating partners’, the United States, Russia, China, Britain, France and Germany, proposition was for Iran to stop making 20%-enriched uranium, seen as the most serious proliferation threat, shut down the underground plant, and transfer its stockpile out of the country under international monitoring. In exchange, Iran would get fabricated fuel plates for a medical research reactor, help with nuclear safety, and spare parts for commercial airliners.
Iranian negotiators however rejected the deal and insisted on its “international” right to make enrich uranium. In additional, Tehran is demanding a relief from sanctions, and offered cooperation with investigation by UN officials into evidence of a weapons programme.
Related News: Iran Feels the Pinch as Oil Export Loss Reaches $10bn
