Wednesday July 11, 2012

I've Been Thinking:

India announced yesterday that they will be insuring Indian tankers that bring oil from Iran to Indian refineries.

Since July 1 and the increased sanctions by the EU many oil shipping tankers were left without coverage and could not transport Iranian oil. As I have already noted, Japan is underwriting $7.5 billion in coverage.

India has allocated $50 million for pollution and $50 for hull and ship damage.

That sum, as large as it may appear, will hardly cover what is necessary. The minimum for an oil cleanup in $1 billion - but this $100 million has stimulated four other Indian insurers to step forward.

This is very good news for Iran.

Despite India's suggestion that they will reduce their dependency on Iranian oil, they are now equipped to receive as much Iranian oil as they need. Estimates are that India will be taking 300,000 barrels per day from Iran. That could translate into 1/5 to 1/ 6 of Iran's daily production.

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