The reluctance of foreign banks to deal with Iran could complicate any compensation payments resulting from the collision last week of an Iranian oil tanker and a Chinese cargo ship, sources say.

The tanker Sanchi, carrying 136,000 tonnes of highly flammable condensate oil, collided with the Chinese dry cargo vessel CF Crystal on Saturday in the East China Sea, causing an oil spill and a blaze that is still raging four days later.

Liability has yet to be established but lawyers and insurers say wherever the fault lies compensation payments risk getting bogged down or even blocked because the tanker and most of its crew were from Iran.

The potential hitches stem from U.S. restrictions on financial transactions with Iran still in place despite the lifting of international sanctions against the country in 2016 following its nuclear deal with world powers, lawyers say.

The Sanchi’s $60 million (£44.40 million) cargo of ultra-light crude oil spilled into the ocean and caught fire after the collision in international waters some 160 nautical miles (300 km) off China.

While the CF Crystal has returned safely to port with its crew, dozens of rescue boats from China and South Korea have been battling strong winds, high waves and poisonous fumes to try to find 31 sailors from the Sanchi and tame the fire.

Rahul Khanna, global head of marine risk consulting with German insurer Allianz (ALVG.DE), said losses from the collision could be in the hundreds of millions of dollars.

“The value of the cargo and the value of the hull itself would be one major impact, but I think the oil pollution liability aspects are probably the largest element,” he said.

He said the environmental impact would be less severe than for a heavy crude spill, however, as condensate evaporates quickly and would not cause a major oil slick.

– Jonathan Saul, Reuters. 01 January 2018.