Britain and France are studying a proposed European Union ban on insuring tankers carrying Iranian oil to see how severe an impact it would have on trade with non-EU countries, British Foreign Secretary William Hague said on Tuesday.
Asked in parliament about a May 8 Reuters report that Britain was seeking to persuade fellow EU members to postpone a ban on insurance for cargoes of Iranian oil, Hague confirmed EU countries were discussing whether the insurance ban should apply from July 1, or later.
“The reason we are discussing that separately is because of concerns raised by other countries outside the European Union about the impact on their trade and so we are currently assessing that, working with France in particular to try to understand how serious that impact would be,” he said.
“We are clearly applying sharply increased pressure to Iran but we also have to bear in mind wider consequences for oil prices and the world economy and balance those concerns.”
European diplomats told Reuters earlier this month that Britain was seeking to persuade other EU members to postpone by up to six months a ban on providing insurance for tankers carrying Iranian oil, arguing it could lead to a damaging spike in oil prices.
An EU ban on importing Iranian oil, which takes effect on July 1, will also prevent EU insurers and reinsurers from covering tankers carrying its crude anywhere in the world.
The impact of the measure is likely to be felt strongly in London’s financial district, the centre for marine insurance.
Iran exports most of its 2.2 million barrels of oil per day to Asia. The four main buyers – China, India, Japan and South Korea – have yet to find a way to replace the predominantly Western insurance shipping cover provided by London insurers.
The sanctions seek to stem the flow of petrodollars to Tehran to force it to halt a nuclear program that the West suspects is intended to produce weapons.
Britain has been a strong advocate of tightening sanctions against Iran over its nuclear program, including the EU oil ban.
Negotiations between Iran and world powers, including Britain, on nuclear issues resumed in Turkey in April after a 15-month gap. Another round of talks is scheduled for May 23 in Baghdad.