Japan and South Korea Negotiate with the U.S. for Exemption from Iran Sanctions

Japan and South Korea, two major oil buyers from Iran, announced on Wednesday, June 26, that they are negotiating with the U.S. government for exemption from the sanctions imposed on the Islamic Republic. Both countries had previously secured such exemptions during the last round of sanctions, which ended in 2015 with the JCPOA, but it seems that this time such privileges are out of reach. Reuters reported on Wednesday, citing Japan's Chief Cabinet Secretary, that the country is in talks with the Trump administration for an exemption. While Yoshihide Suga, Japan's Chief Cabinet Secretary, refrained from providing details, a South Korean official also reported similar negotiations between Washington and Seoul. According to Mr. Suga, the Japanese government is also in discussions with President Hassan Rouhani's administration in Tehran regarding this matter. Less than a week ago, Bloomberg reported, citing informed sources, that the U.S. had asked Japan to completely halt its oil purchases from Iran. This comes as, following the U.S. withdrawal from the JCPOA and the re-imposition of sanctions, Iran's customers were given a six-month period (until November 4) to significantly reduce their oil purchases from Tehran. The request for Japan to completely stop its oil imports from Iran indicates that the Trump administration is implementing much stricter measures than the oil sanctions of 2012 under Barack Obama, leading analysts to believe that exemptions this time are further out of reach for countries like Japan. This prediction should also be viewed in light of the new position of the U.S. State Department. A senior U.S. State Department official stated on Tuesday, June 25, that countries purchasing Iranian oil must stop all imports from this country and bring them to zero by November 4, coinciding with the resumption of U.S. sanctions against Tehran. In response, Iranian President Hassan Rouhani said on Tuesday that Tehran would overcome U.S. sanctions and accused the Americans of waging a "psychological, economic, and political war" against Iran. The U.S. State Department official also emphasized that Washington would not grant any exemptions for countries importing oil from Iran. Despite this warning, it seems that South Korea and Japan, two major U.S. allies in Asia, remain hopeful of being exempt from this rule. In this context, the South Korean Minister of Energy told Reuters that his country would continue negotiations with Washington. Japan and South Korea import "almost all" of their crude oil needs. Last year, Japan was the fourth-largest Asian buyer of Iranian oil, importing 172,000 barrels per day, which accounted for about 5.3% of Japan's total oil imports. Last year, Iran exported 2.125 million barrels of crude oil and about 400,000 barrels of gas condensate daily. About one-third of these shipments went to Europe, while the rest reached Iran's Asian customers, namely China, India, South Korea, and Japan. These figures have remained roughly the same in the first half of this year.