Japan could seek some kind of exemption from the returning U.S. sanctions on Iranian oil exports, as its companies don't want to abruptly stop importing Iranian crude, an official at Japan's Ministry of Economy, Trade and Industry (METI) told S&P Global Platts on Wednesday.
Japan had an exemption from the previous round of sanctions by the U.S. and the EU earlier this decade, Daisuke Hirota, principal deputy director at METI's oil and gas division, told S&P Global Platts.
"We think to continue to get the exemption from the US to keep this amount of imports from Iran," the official added.
Still, Japan needs to clarify what the U.S. position on the matter is, and is in touch with the U.S. government on this.
"The situation in the US government is drastically changing every day," Hirota told Platts, and added that "now we are collecting information and keep in touch with the US government."
Japanese refiners value Iran's relatively low-cost crude because of its heavier qualities, Hirota said. Iranian imports account for around 5 percent of Japan's total crude oil imports, the official noted.
"We need to continue to keep imports, and to keep imports from Iran we need to get information and communication with the US government," Hirota told Platts.
According to S&P Global Platts calculations based on data by Japan's METI, Japanese oil imports from Iran plunged 24.2 percent to average 172,216 bpd in 2017, down from 227,142 bpd in 2016. In January and February this year, Japanese imports declined 12.3 percent annually to 192,289 bpd.
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While China and India may have more wiggle room to continue buying Iranian oil, U.S. allies South Korea and Japan may comply with the renewed sanctions, according to Ehsan Khoman, head of research for Middle East and North Africa at Mitsubishi UFJ Financial Group.
"Japan and South Korea may comply with the proposed U.S. reimposition of Iranian sanctions on the concern of losing the U.S. security umbrella vis-Ã -vis North Korea," Khoman told Reuters on the day after the U.S. withdrew from the Iran nuclear deal.
By Tsvetana Paraskova for Oilprice.com
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