Although OPEC’s decision to take…
LNG producers are on edge…
It is well known that as part of a coordinated campaign the US and EU have pressured Iran with their sanctions to restrict any country importing Iranian crude oil. Under the sanctions law president Obama must cut off foreign financial institutions, who continue to trade with Iran’s central bank without an official exemption, from the US financial system.
Exemptions are available to countries that make significant reductions the amount of Iran crude that they import before the end of June. No official figure has been released to indicate what exactly constitutes a significant reduction, but anonymous officials within the Obama administration have stated that depending on the individual nation’s circumstances they are looking for about 15%.
Yesterday the secretary of state Hillary Clinton announced that Japan, along with 10 European Union countries have earned exemption from the sanctions for a period of 180 days. She praised the efforts of the countries to reduce their imports, which she admitted was “not easy”, stating that “They had to rethink their energy needs at a critical time for the world economy and quickly began to find alternatives to Iranian oil, which many had been reliant on for their energy needs.”
Due to last year’s earthquake and subsequent disaster at Fukushima, Japans energy needs were higher than normal, and yet they still managed to cut their Iranian imports by 22 percent.
The decision means that the countries can still continue to buy Iranian crude, after the sanctions come into effect at the end of June.
Japan’s Finance Minister, Jun Azumi, has said that the government “welcomed the U.S. announcement,” and that they will “keep reducing oil imports at a certain pace.”
Mark Dubowitz, the executive director of the Foundation for Defense of Democracies in Washington, said that yesterday’s decision “begins to reduce some of the uncertainty in oil markets over how the administration will apply oil market sanctions.”
“It gives Japan, in particular, which needs to keep buying Iranian oil, a clear pathway to continue those purchases without putting their financial institutions at risk. It also establishes an early precedent that puts pressure on South Korea, India, China, Turkey, South Africa and other major buyers of Iranian oil to also comply with U.S. law.”
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com