Time running out for Asia's top importers of Iran crude

IRAN'S top crude oil buyers in Asia have just weeks to come up with ways to keep imports flowing without falling foul of the toughest Western sanctions to date against Tehran's oil trade. Solutions have proved elusive so far.!

A year ago, Iran was selling around two-thirds of its crude exports, or roughly 1.45 million barrels per day, to China, Japan, India and South Korea, securing vital flows of foreign exchange for a government many Western nations accuse of running a secret nuclear weapons programme.!

Those imports have already dropped by about a fifth after the European Union and the United States drew up fresh sanctions, and they could drop further after the end of this month when those financial restrictions come into force.!

South Korean refineries have already given up, industry sources said. They will switch to other sources of crude supply from July 1.!

China, India and Japan are scrambling to deal with the biggest headache an EU ban on insuring shipments of Iranian crude from July 1 and are considering sovereign guarantees.!

Europe dominates the world's tanker insurance market, so Asian buyers are finding it difficult, if not impossible, to replace mandatory cover, which for a supertanker means liability protection on personal injury and pollution of US$1 billion.!

"No responsible financial institution is going to take on this kind of risk lightly," said Jonathan Hare, senior vice president for Oslo-based maritime insurer Skuld. "This doesn't mean that it can't happen, but it is going to require a significant commitment on the part of governments or potential underwriters." !

To be sure, alternative supplies are sufficient enough that the big Asian buyers do not need the Iranian crude.!

Global growth is also stumbling, reducing the urgency for many countries affected by the sanctions to find replacement supplies and undermining the argument among oil consumers that loss of Iranian crude could harm economic growth.!

Reuters