* West of England warns Iraqi oil may actually be from Iran
* Such cargoes would be uninsured and in breach of U.S. sanctions
* Insurer warns members of U.S. enforcement action
SINGAPORE, Jan 16 (Reuters) - A shipping insurer has warned that oil cargoes loaded ship to ship at a port in the United Arab Emirates may contain Iranian crude disguised as Iraqi barrels, and that it cannot insure these volumes as they are in breach of U.S. sanctions on Tehran.
Insurer West of England sent a letter to its members this week stating that Iranian crude labelled as Iraqi oil was being transferred ship to ship (STS) by smugglers at the Khor Fakkan port in the United Arab Emirates (UAE).
“It appears that such oil may routinely be described as being of Iraqi origin and as having been loaded on board the transferring vessel at Basra some time before the proposed STS operation,” the insurer said in a letter dated Jan. 13.
The insurer said it “cannot provide insurance to vessels which load Iranian cargo in such circumstances and cover will cease in its entirety if such cargo is loaded”.
The report comes as U.S. lawmakers, keen for Washington to take a harder line with Tehran on its nuclear programme, press ahead with a plan for more sanctions on Iran.
West of England said that documentation of barrels labelled as originating from Basra in Iraq, and which stopped over at Khor Fakkan, should not be taken at face value.
“There is evidence of a sophisticated smuggling operation and those responsible may go to considerable lengths to disguise the true origin of the cargo,” the insurer said in the letter on its website.
West of England, which was not immediately available for further comment, insures over 6,000 ships.
The insurer said in the letter that Iranian vessels loaded with crude had shuttled across the Strait of Hormuz to supply ships with oil labelled as originating from Iraq and destined for countries that do not benefit from a waiver of U.S. sanctions legislation.
The insurer warned its members that transport of Iranian oil without a waiver under U.S. law “may trigger enforcement action against the vessel, its owners and related parties by the U.S. authorities”.
West of England advised its members “to exercise extreme caution when engaging in STS operations in the Arabian Gulf”.
It also recommended that its members check with port agents to ensure that vessels providing cargo by means of an STS transfer in the region loaded the cargo at the port stated in its documentation. (Reporting by Henning Gloystein in SINGAPORE and Arpan Varghese and Anupam Chatterjee in BENGALURU; Editing by Himani Sarkar)