After suspending all shipments of Iranian crude to Japanese refineries ahead of the November 5 launch of U.S. sanctions against Tehran, Japanese refiners are now preparing to resume Iranian oil imports. That’s according to Japan’s Trade Minister Hiroshige Seki as quoted by Reuters.
“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,” Seki said, declining to comment on the size of shipments as compared to imports before the announcement of the sanctions.
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.
As of September, Iranian crude oil accounted for 5 percent of Japan’s crude oil intake, and, as the head of the Petroleum Association of Japan, Takashi Tsukioka, commented in September, Tokyo will try to maintain a good relationship with Tehran despite the sanctions. How realistic this is remains to be seen.
Still, U.S. Secretary of State Mike Pompeo said on Monday that the United States has decided to issue temporary allotments to China, India, Italy, Greece, Japan, South Korea, Taiwan, and Turkey to continue importing Iranian oil, due to the specific countries’ circumstances and to ensure a well-supplied oil market.
While there is an emphasis on temporary, with Pompeo adding “We continue negotiations to get all the nations to zero,” the waivers were largely seen as the biggest reason why oil prices did not rise sharply on Monday when the sanctions went into effect. Statements from China that it will continue buying Iranian oil regardless of U.S. sanctions reinforced the bearishness.
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.