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Japan to Cut Iran Oil Imports

23/02/2012 03:37

Japan is planning on reducing its imports of Iranian oil by at least 11 percent, and perhaps as much as 20 percent.  The country hopes to avoid US sanctions on its banks by decreasing the amount of oil imported from Iran.  Oil prices rose on the news.
Under US sanction, banks can be sanctioned for handling payments to Iran unless their country “significantly reduces its volume of crude oil purchases from Iran.”  Japan has been negotiating with the US to obtain a waiver to continue handling such payments.  Officials have confirmed that Tokyo is willing cut oil imports by at least 11 percent, and the Nikkei business newspaper has said that it could be as much as 20 percent.
Japan is one of the three largest importers of Iranian oil, having increased its reliance on fossil fuels ever since the 2011 tsunami and disaster and Fukushima nuclear plant led it to shut all but two nuclear power plants in the country.  Nonetheless, Japan has been decreasing its imports of Iranian oil by about 10 percent annually since 2007.  Additionally, in response to increasing sanctions against the Iranian oil industry, at least three Japanese refineries have postponed renewing annual contracts with National Iranian Oil Co. pending new information from the government.  The contracts represent a third of Japanese imports, or more than 100,000 barrels a day.
Oil prices rose Wednesday, following the Interational Atomic Energy Agency visit to Iran, which resulted in a report suggesting that the nuclear program could very well be for military purposes.  They rose again today (Thursday) on the news from Japan.  Brent North Sea crude for April delivery rose as high as $124.09.

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Tags:    Japan     Iran     US     sanctions     petroleum     banking
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