Iran crude imports spiked before EU sanctions kicked in

Bloomberg

Oil imports from Iran rose 55 percent in June from the previous month, an increase that preceded European Union sanctions banning the sale of insurance for cargoes from the Persian Gulf nation.

Shipments from Iran rose to 812,693 kiloliters in June, or about 165,000 barrels a day, from 523,223 kl in May, according to data released Monday by the Finance Ministry.

The monthly increase in imports from Iran came before the July 1 start of EU sanctions prohibiting European insurers from covering Iranian cargoes. The sanctions restrict Japan’s shipping insurance association because it gets reinsurance from the European companies. The measures are intended to stop Iran from developing nuclear weapons.

Japanese crude buyers may have boosted Iranian purchases to receive deliveries before the start of sanctions, said Victor Shum, a senior principal at energy consultant Purvin & Gertz Inc. in Singapore. “The sanctions have a significant impact on shipping Iranian oil to customers, so that date was significant,” Shum said. “The increase on oil shipments from Iran to Japan could be related to that timeline issue.”

The government started providing sovereign insurance to tanker operators that import Iranian oil after July 1. Two Iranian oil cargoes backed by the sovereign guarantees were loaded in July.