How Iran's oil buyers are working around sanctions

China, India, Japan and South Korea have worked their way around an EU insurance ban that took effect July 1
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China

\nIn July, China started using the vessels of the National Iranian Tanker Co. (NITC) to deliver oil to its ports, shifting responsibility for insurance to Tehran, sidestepping the EU ban.\n\nSo far, it has nominated full contract volumes of crude for loading in August, just over 16 million barrels. While oil imports have not returned to pre-crisis levels, there has been an increase in crude purchases.\n\nChina's crude oil imports from Iran fell nearly a third in July from an 11-month high in June.\n\nAs Iran's largest trading partner and biggest oil customer, China still disapproves of the tougher Western sanctions and says Iran should be allowed to have a nuclear programme for civilian purposes. It is opposed to Iran having a nuclear weapon.

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India

\nIndia's top oil buyer, Mangalore Refinery and Petrochemicals Ltd, bought 600,000 barrels of Oman oil through a tender in August and is looking towards more tenders to make up for a shortfall in Iranian supplies.\n\nWhile the country has also received embargo waivers from the United States, it has not resumed full trade with Tehran. The country's state-run oil refineries have been given government permission to continue purchasing oil from Iran on a CIF (Cost, Insurance and Freight) basis.\n\nState-insurers led by General Insurance Corp (GIC) have also been allowed to provide up to $50 million in protection and indemnity (P&I) cover for ship owners carrying Iranian oil. It is a fraction of the typical $1 billion that is offered to very large crude carriers (VLCC) carrying around 2 million barrels of crude.\n\nIndia is selectively allowing refiners to import oil using Iran's ships and insurance cover. But Iran does not have enough aframaxes to suit MRPL's needs and Indian shippers feel insurance cover provided by local insurance firms is inadequate.

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Japan

\nJapan is the only country to offer sovereign guarantees on ships carrying Iranian crude. They government is offering cover of up to $7.6 billion, close to the $10 billion usually offered by EU-based insurers that dominate the marine industry.\n\nJapan imported 126,726 barrels per day (bpd) in July, down 52.5 percent from the same month a year ago and down 23.1 percent from June, data from the ministry of finance showed.

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South Korea

\nSouth Korea has joined its Chinese counterparts by asking Iran to deliver crude on Iranian tankers. This shifts the responsibility for insurance to Tehran, sidestepping the EU ban.\n\nThis comes after Seoul previously said there would be no imports because of the new restrictions.\n\nOf South Korea's four refiners, only SK Energy and Hyundai Oilbank import Iranian crude. Asia's fourth-largest economy imported 137,400 bpd in July, 42 percent lower than a year earlier, data from the state-run Korea National Oil Corp showed.