Feb 9 Saudi Arabia and Bahrain have banned Iranian-flagged vessels from entering their waters and imposed other shipping restrictions, according to ship insurers citing local reports, potentially escalating tensions between Tehran and Riyadh.

Iran has been struggling to ramp up oil exports and still faces insurance and financing hurdles despite the lifting of international curbs on its banking, insurance and shipping sectors last month as part of a nuclear deal with world powers.

A ban on Iranian ships in those ports is unlikely to affect international trade, although the uncertainty will add to trade hiccups for Iran.

Some ship insurers in recent days, citing reports from local agents and correspondents, said in notes to members that Saudi Arabia and Bahrain had banned all Iranian-flagged ships from entering their waters.

Norwegian ship insurer Gard said Bahrain had imposed a ban on any vessel that has visited Iran as one of its last three port calls.

"There is currently no such restriction in Saudi Arabia," Gard wrote, citing information from a logistics provider. Saudi Arabian and Bahraini authorities did not immediately respond to requests for comment.

Ship insurer West of England said separately: "An entered vessel has since been denied entry to Bahrain after visiting an Iranian port two port calls earlier, resulting in the fixture being cancelled."

Other ship insurers had yet to issue any guidance or confirm there were new regulations in place.

While oil companies such as Italy's Eni and France's Total have been looking to book cargoes from Iran, international insurers are no nearer to resolving concerns over U.S. sanctions that remain in place.

Last month, Sunni Muslim Saudi Arabia cut ties with Shi'ite Iran after its Tehran embassy was attacked following Riyadh's execution of a Shi'ite cleric.

In solidarity with Riyadh, Kuwait and Qatar subsequently pulled out their ambassadors from Tehran, and the United Arab Emirates downgraded its ties. Bahrain and two non-Gulf states, Djibouti and Sudan, severed relations completely.

Saudi Arabia and Iran - leading members of the Organization of the Petroleum Exporting Countries - continue to grapple with weak oil prices.

By Reuters