Tehran Switches Trade Strategy: New International Sanctions Targeting Fuel Trade into Iran Are Having Mixed Results

Gavin, James, MEED Middle East Economic Digest

On 9 July, Lloyd's of London delivered the latest in a series of blows to Iran's embattled economy. The London-based insurance market declared it would not insure or reinsure petroleum shipments going into the country, following US President Barack Obama's signing into law of new sanctions specifically targeting Iran's fuel imports.

For a country that has consistently failed to produce enough gasoline to keep pace with demand, the new measures imposed on international shipping companies threaten to restrict the flow of fuel to Iran. The Lloyd's marine insurance market represents 15-20 per cent of the total marine insurance industry, and cannot easily be ignored.

Feeling the heat

Key producers have been shutting down supplies this year. UK/Dutch Shell terminated gasoline deliveries to Iran in March, while Swiss-based traders Vitol Holding, Trafigura and Glencore also halted gasoline supplies. In July, Shell failed to renew a jet fuel contract with Iran Air, while the UK's BP has also seen it politic to halt fuel supplies to Iranian airliners. Perhaps more disconcertingly for Iran given its close ties with Moscow, Russia's Lukoil followed suit, bringing an end to gasoline supplies this year.

Iran is clearly feeling the heat. The Lloyd's action coincides with a tightening of …

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Publication information: Article title: Tehran Switches Trade Strategy: New International Sanctions Targeting Fuel Trade into Iran Are Having Mixed Results. Contributors: Gavin, James - Author. Magazine title: MEED Middle East Economic Digest. Volume: 54. Issue: 33 Publication date: August 13, 2010. Page number: 28+. © 1999 MEED Middle East Economic Digest. All Rights Reserved. COPYRIGHT 2010 Gale Group.

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