Could the decisive blow in the West's struggle with Iran involve insurance salesmen? An upcoming European ban on providing maritime insurance for Iran's oil tankers may be the most vexing sanction Tehran has ever faced, experts tell Reuters. That's because 90% of the world's tanker insurance is based in the West, and without insurance, Iran can't ship to essential markets like Japan, China, India, and South Korea. "The bottleneck is insurance," says one Japanese buyer.
Japan and South Korea are urging the EU to carve out exemptions to the rule. If that fails, they're considering either providing government guarantees, or using Iranian insurance. But many doubt Tehran would actually pay in the event of a spill. "The chance is zero," says another Japanese buyer. "Even if Iran said it would, we would have no collateral for that." What's more, sanctions have forced Iran to mortgage many tankers, and those mortgages demand AAA-rated insurance—something a stop-gap insurer probably couldn't provide.