EU insurers strip cover from ships storing Iran oil

Two European insurers have withdrawn cover for tankers involved in the Iranian oil trade, the first such move since tough new sanctions were imposed in July, Reuters reported.

The tankers, operated by Hong Kong's Titan Petrochemicals Group Ltd (1192.HK), were used to store Iranian oil for top oil trader Vitol and little known shipping firm Glammarine, Reuters reported previously.

While the European Union sanctions bar Western-based insurers from covering tankers that carry, rather than store, Iranian oil, the documents obtained by Reuters show the insurers were not prepared to risk falling foul of the curbs.

"Titan's conduct breaches the spirit if not the wording of U.S. and EU sanctions against Iran," a September 14 document quoted Mike Salthouse, director of North Insurance Management, as saying on behalf of the North of England P&I Association, Titan's main insurer.

"Were the Association to continue to provide insurance to the Titan fleet we have concluded that there would be a high probability of further breaches of sanctions," it said.

Gard, the world's second-largest marine insurer, also dropped the shipping and oil storage company, according to a September 7 document from the insurer to Titan. It had covered one of the firm's floating oil storage vessels.

Titan must now find new insurers to continue operating its floating storage business off Malaysia, one of the biggest in Southeast Asia. That could prove difficult if other Western-based insurers, which cover around 90 percent of the world's tanker fleet, also decide to shut Titan out.

The company's floating oil storage business generated more than $64 million in revenue last year, about a fifth of Titan's total revenue, according to the firm's annual results.

Edited by: S. Isayev