India may stop importing Iran oil after insurers back out
Indian refiners may soon be forced to stop importing crude oil from Iran after insurance companies said refineries processing oil from the Persian Gulf nation will no longer be covered.
Western sanctions aimed at crippling Iranian finances by drying up buyers for its crude oil, had last year banned insurance cover to ships carrying Iranian oil.
Since most of the maritime insurance industry is based in Europe and insurers rely on European reinsurance markets to hedge their risk, shipowners refused to ferry Iranian oil.
That problem was overcome by Indian state-owned insurance companies providing cover to Iranian ships carrying oil from the Persian Gulf nation. But now, banks and insurers with EU or US business ties have for the first time said that even the refineries processing oil from the Persian Gulf nation will not get cover.
Sources at public and private sector refiners using Iranian oil, said the insurance companies, fearing blacklisting by US and Europe, have indicated that cover for refineries will not be available. While crude oil imports from Iran continue for the time being, this could become a problem as no refiner can operate without an insurance cover.
“There has been talk of this for some time now but they have not said it openly that insurance cover will not be withdrawn,” a top official at one of the companies said.
Mangalore Refinery and Petrochemicals Ltd, India’s second biggest buyer of Iranian oil after private sector Essar oil, said it will have to halt crude imports from Iran in absence of insurance cover.
“What options do I have,” MRPL managing director P.P. Upadhya told PTI. “Insurance companies have said my refinery does not have insurance cover so I am looking at options.”
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