Britain seeks delay to EU's Iran ship insurance ban

[cqo_000]

Source: Reuters

Tue May 8, 2012 11:29am EDT

* Britain to lobby EU to postpone measure until 2013
* UK fears imminent ban could lead to oil price spike
* Britain controls much of ship insurance market

By Dmitry Zhdannikov and Justyna Pawlak
LONDON/BRUSSELS, May 8 (Reuters) - Britain is seeking to persuade fellow European Union members to postpone by up to six months a ban on providing insurance for tankers carrying Iranian oil, arguing that it could lead to a damaging spike in oil prices, European diplomats said.

A European Union ban on importing Iranian oil, which takes effect on July 1, will also prevent EU insurers and reinsurers from covering tankers carrying Iranian crude anywhere in the world from July.
The impact of the measure is likely to be felt strongly in London's financial district, the centre for marine insurance.

Read more: http://www.reuters.com/article/2012/05/08/iran-eu-insurance-idUSL5E8G8EWW20120508

[amandabeech]

1. Tankers carrying Iranian oil will not sail if they do not have insurance.

The article states that China, India, South Korea and Japan will be hit hardest.

China and India likely will be able to find home country insurance with government guarantees, but South Korea and Japan are having difficulty finding any insurance for their Iranian cargoes, according to the article.

It looks like South Korea and Japan will really be bidding hard for any oil not under contract, and perhaps China and India will be bidding, too.

This could easily mean increased oil prices in the latter half of summer and in the fall.

I don't think that Obama wants high oil prices come November. I just hope that the worst case here doesn't happen. The South Koreans and Japanese have plenty of dollars that they can use to buy up everything in sight, sending the quoted spot price soaring in the Brent market. WTI will be less affected,but it might move upward sharply and smartly.

This is something to watch, folks.