Western powers are prepared to offer Iran an “oil carrot” that would allow it to continue supplying Asian customers, in exchange for guarantees it is not building an atomic bomb.
As the five permanent member of the UN Security Council, Germany and the EU prepare for talks with Iranian officials in Baghdad today, diplomats and oil executives said that Washington and Brussels were likely to hold out the prospect of a possible suspension of an EU insurance ban on ships carrying Iranian oil. They added that the US and EU were not prepared to lift other sanctions – including an EU import ban on Iranian oil – and also cautioned that a deal is unlikely at today’s meeting.
Waiving the EU insurance ban, which takes effect on July 1, would allow China, India, Japan and South Korea to buy shipping insurance in London, which dominates the market. Asian refiners have warned that without a waiver they would not be covered against the risk of expensive pollution claims and would have to halt their purchases of Iranian crude. Asian governments have been mulling offering sovereign insurance to their refiners.