Seoul to stop oil imports from Iran in July

SEOUL - South Korea will be forced to stop oil imports from Iran starting next month as the European Union will ban insurance on Iranian oil shipments, the finance ministry said Tuesday.

The EU Foreign Affairs Council decided on Monday to ban any type of insurance for Iranian oil shipments from July 1 as planned. The ban will lead South Korea to stop Iranian oil imports as local shipping firms cannot carry crude without insurance from Europe, according to the Ministry of Strategy and Finance.

European insurers are now covering all the protection and indemnity insurance on Iranian oil shipments to South Korea, the ministry said, adding that dependence on European insurers to cover cargo and ships is ranging from 70 to 90 percent.

The protection and indemnity insurance refers to a mutual insurance offered by the protection and indemnity club. The club is formed among ship owners or ship operators to provide its members with insurance for broader risks such as damage to cargo and sailors that marine insurers are typically loath to cover.

The finance ministry said the government will work to help minimize the impact from the halt of the Iranian oil imports, saying that it has been making efforts to shun supply shortage by continuously negotiating with other oil exporting nations such as Qatar, the United Arab Emirates, Kuwait and Iraq.

South Korea imported 87.18 million barrels of oil from Iran in 2011, up 20.1 percent from a year earlier. Last year's oil imports from Iran accounted for 9.4 percent of the total.