Japan P&I Club Sets New Rules for Iran Oil Voyages

The Japan P&I Club has imposed new rules onto ship owners covered by their insurance. Advance notifications of plans to transport Iranian oil and other petrochemicals that could violate the Western sanctions must now be made to the maritime insurer.

According to Reuters, Japan's P&I Club, which provides insurance for shipping companies, does not directly fall under the sanctions command, but it is largely dependent on the European reinsurance market to balance its risk.

With the right to deny coverage, the country’s primary ship insurer is requesting to know of any member tankers transporting oil from Iran significantly ahead of time. They can also decline to pay any claims that occur.

The insurer, whose members include major shipping firms like Kawasaki Kisen Kaisha and Mitsui O.S.K. Lines, has confirmed it would only provide coverage worth a maximum $8 million for any tanker carrying Iran oil and petrochemicals, greatly reduced from the typical $1 billion coverage. Any reinsurers including other P&I clubs subject to EU legislation will not be able to pay out if a claim involves a sanctioned cargo.

Iranian crude has also decreased from the country’s import amount since the beginning of this month.

The United States and European Union have stiffened measures aimed at reducing Iran's oil trade, in an effort to force the country to halt a nuclear program that the West suspects is anticipated to produce weapons. European insurers and reinsurers will be prohibited from protecting ships carrying Iranian petrochemicals anywhere in the world from May, and crude and oil products from July.