OREANDA-NEWS.  July 03, 2012. India, one of Iran's biggest crude buyers, has just secured a waiver from U.S. sanctions which target Tehran's nuclear ambitions by cutting imports over 20 percent.

But European sanctions that come into effect from July 1 ban insurers and reinsurers from covering shipments of Iranian oil, leaving buyers in Asia - Iran's biggest market - struggling for cover.

Based on Reuters news agency, Around 90 percent of the world's tanker fleet is covered by Western-based protection and indemnity (P&I) clubs, which insure against personal injury and environmental clean-up claims.

Among other Asian buyers of Iran oil, Japan will provide sovereign guarantees for Iranian shipments, China has asked Iran to deliver the crude while South Korea will halt imports from July.

"Yes, we have allowed them to buy oil from Iran on CIF (Cost, Insurance and Freight) basis," said a senior shipping ministry official.

Unlike private refiners, India's state-run companies need government permission to import oil on a CIF basis as federal policy requires them to favour Indian insurers and shippers by buying only on a Free on Board (FOB) basis.

India aims to buy 310,000 bpd of oil from Iran under contracts during the fiscal year from April to March, which includes 100,000 bpd of purchases by Essar Oil (ESRO.NS), the only private customer.

The United States earlier this month extended exemptions from its tough, new sanctions on Iran's oil trade to seven more economies including India but China remains vulnerable.

Indian state insurers led by General Insurance Corp (GIC) had agreed to provide USD50 million of cover for the ships carrying Iran crude from July but this has been delayed as the insurance regulator has not yet given its approval.

The Shipping Ministry has said it has "no objection" to refiners buying oil from Iran on a delivered basis "for 6 months with effect from July 1, 2012 or until GIC provides P&I/H&M (Hull and Machinery) cover or U.S., EU sanctions are lifted; whichever occurs earlier," said a source privy to the letter.