US oil giant Chevron denied $57m insurance claim for tanker seized by Iran

Three US insurers have refused a $57m claim by oil giant Chevron over the seizure by Iranian forces of a suezmax tanker’s cargo.

Armed and masked members of the Iranian navy seized the 159,100-dwt Advantage Sweet (built 2012) and its $51m cargo in the Gulf of Oman in April 2023, in apparent retaliation for the US seizure of a tanker hauling Iranian oil five days earlier.

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Chevron, which owned the oil, first notified the insurers of the loss the day after the boarding and filed a full claim a year later, according to US court papers.

But Zurich American Insurance, Liberty Mutual Insurance and Great American Insurance say the claim is not covered by marine cargo or war risks insurance taken out by the oil major.

They said the marine cargo policy excluded payouts for “capture, seizure, arrest, restraint, detainment, confiscation, pre-emption, requisition or nationalisation … whether in time of peace or war”.

And the insurers said the seizure of the Advantage Sweet and its cargo did not represent “warlike operations” under the terms of the war risks policy.

Chevron said it will contest the insurers’ findings and described the seizure as “a hostile act plainly covered by our insurance policies”, according to a company spokesperson cited by Reuters.

Abundant evidence

“Chevron became entangled against its will in hostilities between the Iranian and US governments,” it said in its claim.

It said there was “abundant and well-documented evidence” that the seizure fell within the war risks section of its policy.

Chevron had chartered the Chinese-owned, Turkish-operated Advantage Sweet to haul crude from a neutral zone shared by Saudi Arabia and Kuwait to Houston, Texas.

The full $57m claim adds an extra 10% entitlement to the cargo value as agreed under the policy, according to Chevron’s proof of loss claim.

The cargo was transferred from the Advantage Sweet to another tanker under Iranian control in March this year.

The insurance dispute is set to be played out in court in San Francisco, where the insurers are seeking judgments that the claim is excluded from the policies and they do not have to pay up.

Zurich is the lead insurer with a 40% stake in both the marine cargo and war risks policies. Liberty also has 40%, while Great American has 20%, according to court documents.

The Advantage Sweet is one of a number of vessels captured by Iranian forces in tit-for-tat battles over US sanctions that were reimposed in 2018 by former president Donald Trump.

The US said in January that Tehran was holding five ships and more than 90 crew hostage from vessels seized in 2023, according to the court papers.

Five days before the seizure of the Advantage Sweet, the US seized and later sold more than 980,000 barrels of Iranian crude on board the Greek-owned 158,600-dwt Suez Rajan (built 2011).

After the ship discharged its cargo in Texas, the ship returned to the Middle East under the new name of St Nikolas.

When it arrived in Oman, Iranian forces hijacked the ship and it remains in Iranian custody.

Brigadier General Alireza Tangsiri, head of the Naval Force of Iran’s Islamic Revolutionary Guard Corps, warned in March that more tankers would be seized if the US continued to confiscate crude cargoes.

“But if today they steal our oil or intercept our oil tankers anywhere in the world, we will respond in kind. Gone are the days when foreign powers would act like bullies to plunder Iranian people’s wealth,” Iran Front Page quoted Tangsiri as saying.