Bloomberg: US Requests Japan to Completely Halt Oil Purchases from Iran

Bloomberg reported on Friday, June 21, citing informed sources, that the United States has asked Japan to completely stop its oil purchases from Iran. Following the US withdrawal from the JCPOA and the re-imposition of sanctions, Iran's customers were given six months (until November 13) to significantly reduce their oil purchases from the country. Bloomberg reported on Friday that the US has requested Japan to halt its oil purchases from Iran entirely. Concurrently, Reuters quoted the president of the Japan Petroleum Association stating that if issues regarding money transfers and Iran's sanctions are not resolved, Japan will likely be unable to purchase oil from Iran starting in October. Bloomberg writes that US officials raised the issue of completely halting oil purchases from Iran during a meeting this week with their counterparts in Tokyo, but the final decision on this matter has been postponed to future meetings. Last year, Japan was the fourth-largest Asian customer of Iranian oil, importing 172,000 barrels per day, which accounted for approximately 5.3% of Japan's total oil imports. Bloomberg notes that the request to completely stop Japan's oil imports from Iran indicates that the Trump administration is acting much more stringently than the oil sanctions imposed by the Obama administration in 2012. Under those sanctions, Iran's customers were required to significantly reduce their oil imports from Iran every six months (which was practically 20% before the JCPOA) to be exempt from US sanctions. This is the first time the US has requested a major customer of Iran to completely halt oil purchases. Meanwhile, Takashi Tsukiyoka, the president of the Japan Petroleum Association, announced on Friday that the decision regarding oil imports from Iran will likely be made in August, less than two months from now, and Japan will also consider the actions of other Asian customers of Iran such as China, India, and South Korea. Reuters also reported on Mr. Tsukiyoka's remarks, stating that if Japan cannot obtain an exemption from US sanctions, it will likely stop buying Iranian oil starting October 1. He mentioned that the last oil purchase from Iran could occur in August to be received in September. According to the contract, payment for Iranian oil is also made two months after receiving the oil shipment. Therefore, with the onset of US oil sanctions in November, the transfer of money for Iranian oil exports to Japan will practically not be possible. He also stated that it remains to be seen how other customers of Iran, such as South Korea, India, and China, will react to the sanctions. According to OPEC reports, Iran had approximately 2.125 million barrels of daily oil exports last year, two-thirds of which went to Asian markets and the rest mainly to Europe. Iran had planned to maintain nearly the same level of oil exports for this year. In the previous round of sanctions, Iran's daily crude oil exports fell from 2.2 million barrels to one million barrels due to sanctions. The International Energy Agency has predicted that Iran's production and consequently its oil exports will decrease by 900,000 barrels per day by the end of next year. Bloomberg, citing an expert from the Singaporean energy consulting firm 'Aspects', reported that the oil sanctions against Iran could lead to a daily production drop of one million barrels.