Iran Seeks to Revive Japan Oil Trade as Buyers Push for Longer Waiver
Synopsis
Prospective Japanese buyers are weighing a return to Iranian crude imports but want longer U.S. sanctions exemptions and assurances over maritime security.
Key Highlights
- Japan is starting negotiations with Iranian companies to resume oil exports, pending a 60-day US waiver.
- The existing waiver was published on July 22 and runs until August 21.
- Japanese purchasers desire an extended waiver and guarantees on shipping safety.
- If any purchases are made, it would be Japan’s first imports of Iranian oil since 2019.
- The Strait of Hormuz is still a big barrier to deals.
Iran has begun talks with Japanese firms to export fresh shipments of crude oil under a temporary US sanctions waiver, but prospective buyers were seeking an extended period of the waiver, resulting in greater certainty over tanker safety.
The 60-day waiver was granted on 22 June during peace negotiations between Tehran and Washington, but is set to be lifted on 21 August.
Three Japanese buyers are reportedly in the frame to buy Iranian crude for the first time since 2019, as Japanese and Iranian officials hold preliminary talks on possible oil sales. Japan’s Ministry of Economy, Trade and Industry (METI) said it was unaware of the negotiations, while Japan’s foreign ministry and US Treasury declined to comment immediately.
Buyer Seek Lengthier Waiver and Shipping Certainty
Iranian officials say that any agreement would need the United States to renew the existing sanctions waiver because of the time-lag in shipping from Iran to Japan.
Iran intends to fill cargoes from Kharg Island with Japanese-controlled tankers. A senior Iranian oil ministry official told Iranian state television that NIOC had sent letters to previous customers from states, including Japan which he said should now restore purchases if a wider peace deal leads to sanctions being lifted.
Japan, South Korea, India among dozens of other countries cutting Iranian oil supplies Japan is just one of the major economies to stop importing from Iran, as a result of US sanctions which kicked in after Donald Trump withdrew from the Iran nuclear deal in 2018. China has since then, remained the top oil buyer from Iran.
Strait of Hormuz Risks Remain
The Strait of Hormuz is still surrounded by tension in terms of security, which has disrupted several deliveries.
Iranian authorities to date say ships passing through the waterway need permission from the Islamic Revolutionary Guard Corps (IRGC). A container ship was said to have come under attack in the Strait last week and the United Nations’ shipping agency estimates that about 80 floating mines are still afloat in the central part of the waterway.
According to industry sources, one of the biggest barriers that Japanese refiners still face in obtaining marine insurance. The analysts noted the temporary US sanctions waiver is not expected to generate moderate buying interest from major Asian refiners for all grades of Iranian crude, and would likely be more supportive only among independent Chinese refineries over the duration of the waiver.
Source: Reuters
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