Iranian sanctions and the environment...
The imposition of sanctions on any nation is draconian, by any measure, because it brings about nothing but economic impedance. Ultimately they affect all facets of our lives negatively. As such, and with the pending EU sanctions against Iran due to come into effect in the next three mouths, we should all be concerned about the potentially irrevocable damage to our environment that could be an unexpected consequence of the planned EU sanctions against Tehran.
The global consequences of the sanctions against Iran and in particular its oil exports are now starting to have an impact on the global insurance market with news in the past few days from Hong Kong that maritime insurers there are unlikely to be able to provide full cover for tankers carrying Iranian oil once the new sanctions come into force
For the maritime industry, all European insurers and reinsurers will be banned from indemnifying ships carrying Iranian crude and oil products anywhere in the world. Although many Asian ship insurers such as the China and Japan's P&I Clubs, do not fall under the sanctions regime, they are very dependent on the European reinsurance market e.g. Munich Re to limit their risks - especially where typical P&I coverage limit for a supertanker is circa $1 billion.
What seems to have been missed in the Iranian sanctions debate is that without global reinsurance protection, more non-EU maritime insurers and P&I Clubs will have no option but to follow the lead of the Hong Kong ship insurers. This puts all of us and our fragile eco-systems at risk in the event of one or more uninsured Iranian tankers having an accident that results in a devastating oil spill.
It could be argued that state-provided cover is an alternative but this could be difficult in the event of a major claim scenario. Of course, the ultimate solution is for all oil buyers to halt all Iranian imports - the ultimate global sanction scenario - but this would only shift the impact to the price of crude oil - which will go up - resulting in a range of unwanted problems for our already sensitive global economies.
Given that one supertanker can carry up to 2 million barrels even one uninsured ship is a disaster waiting to happen. The US and EU need to rethink the "small print" of the planned sanctions and allow global reinsurers to continue to provide financial support for P&I Clubs insuring Iranian oil exports - if only to fund environmental clean-ups.