Bloomberg: Japan is curbing crude oil imports from Iran, its third-largest supplier, out of concern the standoff over the Middle Eastern country’s nuclear program increases the risk of supply disruptions. May 31 (Bloomberg) — Japan is curbing crude oil imports from Iran, its third-largest supplier, out of concern the standoff over the Middle Eastern country’s nuclear program increases the risk of supply disruptions.
Imports from Iran tumbled 20 percent to 2.18 million kiloliters (37,614 barrels a day) last month, bringing the decline to 14 percent for the four months ended April 30, according to Trade Ministry data. Japan brought in more oil from Saudi Arabia and the United Arab Emirates, the ministry said in a report released in Tokyo today.
Iran said it is pressing ahead with its uranium enrichment program in defiance of demands by the United Nations for a halt to the work. The U.S. said it suspects the research is a cover for building a nuclear weapon. Japan seeks to lessen the impact of any upset to supplies because it depends on imports for almost all the oil it needs to fuel the world’s second-largest economy.
“High dependency on Iran is a disadvantage” at the moment, Ken Koyama, senior research fellow at the Institute of Energy Economics Japan, said by phone. “Japan needs to think about ways to diversify its supply sources.”
Japan, Asia’s biggest oil importer, got 13.8 percent of its oil from Iran in 2005. The Islamic Republic holds the world’s second-largest reserves of oil and gas.
Nippon Oil Corp., Japan’s biggest petroleum refiner, will cut oil imports from Iran this year by 15 percent, Chairman Fumiaki Watari said on March 15. The Tokyo-based company plans to reduce imports to 120,000 barrels a day, from 142,000 barrels a day last year, he said.
Oil imports from Saudi Arabia jumped 15 percent to 26.6 million kiloliters in the January to April period. From the U.A.E., imports rose 11 percent to 21.3 million kiloliters, according to the Trade Ministry.
Concern that UN sanctions would lead to a halt in shipments from Iran, the fourth-largest oil producer, helped push up oil prices 18 percent this year.
The five permanent members of the UN Security Council will tomorrow consider a package of incentives and sanctions to get Iran to halt its nuclear research. The U.S. is optimistic the measures, which give Iran a choice between confrontation and negotiation, will be endorsed, Agence France-Presse reported, citing State Department spokesman Sean McCormack.
Iran denies it’s trying to build an atomic bomb and says its program is intended to produce energy for peaceful use.
“The tensions over Iran may ease a little but it won’t go away,” said Anthony Nunan, assistant general manager of international petroleum business at Mitsubishi Corp. in Tokyo.