BRUSSELS, March 20 (Reuters) - European Union diplomats have postponed a decision on whether to grant exemptions to a ban on insuring Iran's oil shipments, which is being introduced as part of sanctions against the country but has drawn fire from Asian oil importers.
"For the moment there is no deal," an EU diplomat with close knowledge of the talks said on Tuesday.
"Discussions will continue tomorrow," the diplomat said, adding negotiators hoped to reach an accord before a meeting of EU foreign ministers scheduled for Friday.
The EU agreed an oil embargo in January to stop members from importing crude from Iran as part of sanctions aimed at isolating the country over its suspected nuclear weapons programme.
The strategy includes a ban on EU insurers and reinsurers from indemnifying vessels carrying Iranian crude and fuel anywhere in the world.
That could prevent Iran's biggest crude buyers in Asia from importing Iranian crude because they rely on European insurers who cover most of the world's oil tanker fleet.
Japan and South Korea have lobbied European governments for exceptions to ensure oil deliveries.
Some EU countries, however, are wary of weakening the impact of EU measures on Iran, particularly as member states such as Greece are making big sacrifices, like giving up favourable deals with Iran, as part of the sanctions.
"To tell Greece that we are going to exempt insurance to Japan means we agree that Japan can go on buying oil," said one senior EU official. "So for countries in Europe that are making a lot of sacrifices, it is not easy to understand why you have a special treatment for someone and not for them."
The EU's January decision included a transition period that allows EU states to continue bringing in oil to Europe under existing contracts until July.
On Tuesday, representatives in Brussels of EU governments debated a proposal to allow all insurance on Iranian crude bound for countries outside the EU to be extended until July 1.
Rising international political tension between the West and Iran and uncertainty over how the EU embargo and U.S. sanctions will impact oil supplies have driven up benchmark crude prices. So Iran is receiving a higher price for its exports, while importers such as Japan and South Korea face a rising fuel bill.
Tehran denies Western charges over its nuclear programme, saying it is for peaceful purposes such as power generation.