Korea is likely to resume the import of Iranian oil from mid-September as Iran pledges to insure shipments of its oil for foreign tankers following the European Union’s insurance ban.

Korea has suspended imports of Iranian oil since June 25, after the EU decided to stop insurance contracts on tankers carrying Iranian crude in protest against the country’s nuclear programs.

“Iranian officials and Korean refiners are discussing ways to ship crude oil via Iran’s fleet. There is some progress in the talks,” said a government source in an interview.

According to the unnamed source, discussions were underway on specifics such as the oil price, shipment costs and schedule, with their deadline ending within the month or in early September.

Considering it takes some 20 days for oil to ship from Iran, the source predicted that oil imports could start mid-September, even though the amount would be scaled back compared to before.

The EU has joined the U.S. in toughening sanctions on Iran in order to pressure Iran to halt its nuclear programs by squeezing its foreign exchange reserves.

Korea was exempted from a U.S. law that bans economic entities dealing with the Iranian central bank from doing business with U.S.-based financial institutions.

The Seoul government, however, failed to receive an extra waiver from the EU for insurance contracts on tankers carrying Iranian crude, which triggered a halt in oil imports from Iran.

The insurance ban blocks EU insurers and reinsurers from covering tankers transporting Iranian Oil. Around 90 percent of the world’s tanker insurance is underwritten in the West.

Last month, the Iranian government proposed the option of using the country’s fleet of 47 oil tankers and Korea allegedly accepted the idea due to financial difficulties among small and medium-sized firms exporting products to Iran.

Iran made up 9.4 percent of Korea’s crude imports estimated at 930 million barrels last year, according to government data.

By Lee Ji-yoon (jylee@heraldcorp.com)