Part of EU sanctions intended to restrict Iranian oil import revenues in an attempt to exert economic pressure on the country over its controversial nuclear development program will see Iranian tankers lose their insurance, most of which are insured by London based brokers.
Those countries still willing to import Iranian crude must find new methods of insuring the tankers before they can leave terminals in the Persian Gulf.
Japanese parliament is about to pass a bill which will allow the government to provide insurance cover up to a value of $7.6 billion for each tanker carrying Iranian crude bound for Japan. The bill will make Japan the first sovereign to provide cover once the EU sanctions take effect in July.
The secretary generals of the Liberal Democratic Party, the biggest opposition in the Japanese parliament, have backed the bill, which offer hope that it will be fully passed once the current parliamentary session ends on June the 21st. The government wants to enact the bill this month so that it can be put into effect before the EU sanctions on July the 1st.
Iranian oil accounted for nearly 9 percent of Japan's crude imports last year, and whilst Japan has significantly reduced its purchases from Iran in order to earn exemption from the US sanctions, it is still reliant on all of its imports due to its overall increased demand for oil after last year’s Fukushima disaster.
By. James Burgess of Oilprice.com