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Japanese refiners are unlikely to continue buying Iranian crude from April onwards, the president of the Petroleum Association of Japan said as quoted by Reuters.
However, Takashi Tsukuoka added they would continue importing Iranian crude if Tokyo agreed on a sanction waiver extension, which it was currently negotiating with Washington.
This makes Japan the second country to try and negotiate a waiver extension, after India entered identical talks earlier this month. Washington has signaled it would probably agree to some form of an extension as long as the importing countries agree to reduce their intake of Iranian crude.
Japan has been very strict in following Washington’s lead in the sanction department, but it has also indicated that finding an alternative to Iranian crude might be tough.
“Japan has told the U.S. that the sanctions should not negatively affect Japan’s stable supply of energy and Japanese companies’ operations,” one government official in Tokyo said, commenting on the waiver negotiations to Reuters.
Japanese refiners stopped buying Iranian crude ahead of the November 4, 2018, deadline set by Washington to all countries doing business with Iran before economic sanctions returned. A month later, Tsukuoka told media local refiners would restart buying Iranian crude in January, adding "We aim to lift as much as possible over January-March to keep our hope for the next [period]."
Before the U.S. sanctions snapped back, Iran accounted for 5 percent of Japan’s crude oil intake, and as Tsukioka said last September, Tokyo was going to try to maintain a good relationship with Tehran despite the sanctions.
This will be difficult to accomplish in light of Washington’s plans to gradually press Iranian oil exports as low as they can get without plunging the oil market into a panic that would cause prices to shoot up.
Japan—like Iran’s other major imports including China, India, and South Korea—is highly dependent on imported fuels.
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.