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The Japanese parliament approved an extension of insurance coverage for imports of Iranian crude oil effective from the start of April and expiring a year later. However, this does not mean Japanese refiners will continue buying Iranian crude if they do not score sanction waivers from Washington.
Reuters reports Japan’s parliament approved the import insurance extension yesterday. Now, refiners are pressing the government to find a way to secure an extension to the waiver that Washington granted Tokyo and seven other importers in November.
Despite the sanction waiver, Japan only restarted its purchases of Iranian crude last month, at a rate of just a little above 76,000 bpd, compared to almost 160,000 bpd a year earlier. S&P Global Platts reports this was the first time Japanese refiners took in Iranian crude in four months as they treaded with extra caution around Washington, which still aims to reduce Iranian oil exports to zero.
According to shipping data from S&P Global Platts, the last Japan-bound cargo of Iranian crude left earlier this month and should reach Japan by mid-April. The sanction waiver that the U.S. granted Japan and seven other importers expires on May 4.
The chances for an extension seem slim right now. Washington’s special envoy for Iran, Brian Hook, earlier this week told VOA no new waivers will be granted after the expiry of the current ones.
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“The policy of the United States is that we are not looking to grant any new oil waivers,” Hook said. “We did have to grant eight oil waivers in order to avoid shocking the global oil markets and causing a dramatic increase in the price of oil. We have taken off roughly 1½ million barrels of Iranian crude, and we have avoided a price increase in oil.”
“And that’s not an accident. We’ve done it very well and very carefully. 2019 is going to be a much better market for global oil supply, and the forecasters say that there will be more supply than demand. That gives us much better market conditions to accelerate our path to zero imports,” the official added.
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.