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Oil Prices Fall After Misleading Trade War Rumors

Oil Prices Fall After Misleading Trade War Rumors

Oil prices fell significantly on…

Japanese Refiners Will Resume Iran Crude Purchases Next Month

oil refinery Japan

Japanese refiners will start buying Iranian crude oil in January, but will only continue buying until March to make sure they don’t get on the bad side of Washington in case the 180-day sanction waivers are not extended, S&P Global Platts reports, citing the head of the country’s Petroleum Association.

"We aim to lift as much as possible over January-March to keep our hope for the next [period]," Takashi Tsukioka said.

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. Earlier this year, while the government tried to secure a waiver from the U.S. State Department, local refiners stopped all purchases of Iranian oil ahead of the sanctions that came into effect on November 5.

Even though the sanction waivers were issued last month, Japanese refiners—like their counterparts in South Korea—have steered clear of Iranian crude so far because there was not enough clarity about tanker insurance, S&P Global Platts notes. Now, they will have three months to stock up on cheap Iranian oil before the waivers expire.

The Trump administration has made it clear the ultimate goal of the sanctions was to bring Iranian oil exports down to zero, which puts a question mark over any extensions. On the other hand, Japan, like China, India, and South Korea, may find it hard to secure alternative supplies in amounts and for prices that would justify them, hence the three-month buying spree Japanese refiners are preparing to embark on.

S&P Global Platts also quoted a U.S. government official who wished to remain anonymous as saying that all transactions involving the purchase of Iranian crude by the eight countries granted waivers had to be completed before May 5, when the waivers expired.

"If someone takes delivery or pays for Iranian crude oil when they do not have an active SRE (significant reduction extension), that transaction would be sanctionable." 

By Irina Slav for Oilprice.com

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