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Japan has resumed purchases of Iranian crude oil, the governor of the central bank of Iran told state news agency IRNA, Reuters reports.
“After China, South Korea, India and Turkey, Japan also started the process of importing Iranian oil,” Abdolnaser Hemmati said.
Japan refinery industry insiders said late last year that they were planning to resume imports of Iranian crude in early 2019, with Trade Minister Hiroshige Seki telling Reuters in November “It would be up to the judgment of private firms, but based on this decision, the (Japanese) companies would likely prepare for resuming Iran crude imports.”
Japan is one of Iran’s largest oil importers, but it is also the United States’ staunchest ally in Asia—and the combination of the two has not worked to Tokyo’s advantage. While the government has been trying to secure a waiver from the U.S. State Department, the Japanese economy seems to be dependent enough on U.S. lending to make local refiners extra-cautious.
Last year, crude oil imports from Iran accounted for 5.3 percent of Japan’s total, but for first five months of 2018 shipments were undeterred by U.S. sanctions. Once President Trump announced he was pulling out the United States from the Iran nuclear deal, Japan and South Korea began preparing for a suspension in Iranian oil imports.
The current restart may also be temporary: the current sanction waivers expire in March, and chances are that Japan, like South Korea, will not risk angering Washington unless it expressly extends the waivers, which many observers believe will happen as alternative sources of crude oil at low enough prices are hard to come by.
Meanwhile, Iranian oil exports inched up in December from November, according to data from the International Energy Agency, to an average daily of 1.3 million bpd, despite the fact Japan and South Korea were not buying Iranian crude that month.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.