Japan, US to continue discussion on Iran sanctions after latest talks

Japan and the US will continue discussions on Iranian sanctions after the latest round of talks, a Japanese government official said Wednesday, which comes after Japanese refiners have already suspended loadings of Iranian oil ahead of the country's sanctions waiver expiry in early May.

Register Now In the latest talks in Washington Monday, "the Japanese side insisted that [the US sanctions] should not have a harmful effect on Japan's stable energy supply and its corporate activity," the Japanese government official said.

"Japan and the US will continue close discussions on the issue going forward," said the official, declining to elaborate on future discussions.

The Monday meeting was attended by Hiroshi Oka, Japan's Director-General/Assistant Minister for Foreign Affairs for Middle Eastern and African Affairs, and Sandra Oudkirk, US Deputy Assistant Secretary, Bureau of Energy Resources, at the Department of State, along with other officials, including from Japan's Ministry of Economy, Trade and Industry and the US Department of Energy.

At a press briefing in Washington Monday, US Secretary of State Mike Pompeo did not say whether the US was prepared to grant new six-month waivers to Iran's top oil buyers when the current exemptions expire in less than a month. "We'll make that decision in due course as we move toward May 2," Pompeo said.

Japan is one of eight countries that received a 180-day significant exemption from US sanctions on Iran.

In early March, a Japanese buyer loaded what appeared to be the last Iranian oil cargo arriving in Japan ahead of the waiver's expiry amid uncertainty over whether it will be extended beyond May.

The VLCC Kisogawa left Iran's Kharg Island on March 14 after loading Iranian oil and is in Japanese waters for discharge in coming days, according to S&P Global Platts trade flow software cFlow. The Kisogawa is under a time charter with refiner Showa Shell, according to a VLCC broker in Japan. The tanker also co-loaded a Qatari oil cargo for Fuji Oil.

Other Japanese buyers of Iranian oil -- Idemitsu Kosan, JXTG Nippon Oil Energy and Cosmo Oil -- have already completed their loadings under the current waiver, according to sources familiar with the matter.

Japan imported 135,013 b/d of Iranian oil in February, marking the first imports in four months, according to METI data.

Iran was the fifth largest crude supplier to Japan in February, accounting for 4.4% of its total imports of 3.09 million b/d.

February imports of Iranian oil were down 25.1% on the year, while Japan's last imports of Iranian crude prior to February averaged 48,033 b/d in October 2018, according to METI data. Iranian Heavy crude accounted for 86.8% of the total Iranian oil imported in February, when Japan also took 249,139 barrels of Soroosh, marking the first imports of the grade since May 2016.