South Korea's Ministry of Trade, Industry and Energy has stated that it will sign a US$2-billion contract for trade insurance financing with Iran.
The South Korean statement said that the move is to insure trade with the Islamic Republic of Iran as both sides work to boost economic ties following the ending of international sanctions against the latter.
Meanwhile, Bloomberg reports that the National Iranian Tanker Co (NITC) is close to obtaining new insurance needed to boost crude exports and resume trade with customers after four years of sanctions.
NITC has been negotiating with foreign organisations for the past six months to get its vessels classified, insured against risks like oil spills and registered internationally and is “close to an agreement”, Mr Nasrollah Sardashti, the company's Director of Commercial Affairs, said in an interview with Bloomberg. All three are needed for Iran to be acceptable to previous major buyers, including those in Europe, he said.
Iran has been allowed to ship oil to China, India, South Korea, Turkey and Taiwan after sanctions were tightened in 2012. Iran has been using Kish P&I, backed in part by the government, for insurance on existing shipments and now needs to go the International Group of P&I Clubs for expanded coverage, Mr Sardashti said. The organisation’s 13 members protect more than 90% of the world’s crude carriers against risks including spills.
However, with US sanctions still in place, which exclude US persons, banks and insurers from trading with Iran including dollar business, shipping and marine insurance sources say many foreign companies are likely to take their time, reported Reuters. They are also mindful of sanctions being reimposed in a "snap back" if Iran reneges on commitments.
Securing international insurance cover as well as reconnecting with the international banking system will be key to determining how quickly Iran can ramp up oil exports and re-engage with the foreign shipping sector.