Japan Set to Cut Iranian Oil Imports by 20%

Japan, which gets about 9% of its crude oil supply from Iran, is negotiating with the US for a waiver of sanctions on its banks if it cuts the country’s Iranian imports by 20%. Without the waiver, Japanese banks could be penalized for doing business with Iran.

In 2011, Japan imported about 313,000 barrels/day from Iran, a total that would drop to 250,000 barrels/day if the proposed cut is adopted. Japan is concerned that such a large cut will raise prices, but far worse, from the country’s point of view, are sanctions against its financial institutions that could be imposed by the US if a negotiated settlement can’t be reached.

The 20% figure reported today by Reuters is significantly higher than the 11% reduction that was being discussed yesterday. Japan cannot fully replace its imports from Iran, and it undoubtedly hopes that the US will waive that requirement if the country offers to take a substantial cut.