Japan is considering resuming imports of Iranian crude oil for the first time in about six years, as US sanctions on Iran have been temporarily eased, according to reports. However, some analysts say it remains unclear whether actual deals will materialize, given the short sanctions moratorium period and lingering transport safety concerns.
According to Reuters on Tuesday, Iran is holding early-stage talks with three Japanese companies on crude oil exports following an armistice negotiation with the United States. A source on the Iranian side said three Japanese buyers are considering purchasing Iranian crude, and that government officials from both countries have also begun discussions on the possibility of oil trade.
The US Treasury Department issued a 60-day temporary general license on the 22nd of last month, permitting the production, delivery and sale of Iranian crude oil. As a result, Iran can export crude and receive payment in dollars until August 21.
Japan was once one of the major importers of Iranian crude, along with South Korea, India and European countries. But it halted imports from 2019 after the United States withdrew from the Iran nuclear deal (JCPOA) in 2018 and reinstated sanctions on Iran. China has since served as the largest buyer of Iranian crude.
Still, considerable hurdles remain before imports can actually resume. Japan's position is that Iran must guarantee the safe passage of oil tankers before any crude purchase, and securing insurance is also cited as a key variable to be resolved.
The trade industry views it as unlikely that new contracts will be reached in the short term, as the US sanctions moratorium is only 60 days and crude inventories at Asian refiners are relatively sufficient. Iran, too, has stated that given the time required to transport crude to Japan, an extension of the US sanctions moratorium would be necessary for smooth trade.
