Japan, China to import Iran oil despite EU ban
TOKYO AT LEAST two of Asia’s four top buyers of Iranian crude will keep imports flowing, though at overall reduced rates, as they find ways around an EU ban on insuring tankers carrying the Islamic country’s oil.
Asia needs oil to feed growing demand and top consumers are reluctant to entirely halt imports from Iran and depend entirely on top exporter Saudi Arabia, especially given that output from other alternative suppliers such as Libya and Iraq has not stabilised.
Japan has secured a parliament approval that allows the government to provide insurance cover, while China is asking Iran to take on the risk and deliver the crude on their ships.
South Korea and India have yet to find a way out.
Together, Japan and China have nominated loadings for as many as 620,000 barrels per day of Iranian oil next month, sources said on Wednesday. A year ago, the Islamic Republic was selling around two-thirds of its crude exports, or roughly 1.45 million bpd, to these four Asian buyers.
In less than two weeks, the four Asian buyers who are Iran’s biggest customers will lose access to European insurers that cover 95 percent of the world’s tankers for oil spills and collisions, as western countries seek to curtail Tehran’s disputed nuclear program.
India’s government, which has won an exemption to US sanctions, has been trying without success to figure out how it will get around the EU sanctions.
South Korea will halts imports due to the insurance ban, industry sources have said.
Seoul, like Tokyo, has lobbied the EU to delay or get a waiver on implementing the ban on insurers. It is not considering state guarantees, according to government sources.
Those lobbying efforts have so far failed. The European Union will not cancel or delay the embargo on Iranian oil tankers, EU Energy Commissioner Guenther Oettinger said at an industry conference a week ago.
The International Energy Agency said last week that Iran’s crude exports in April and May have fallen by 1 million bpd since the end of 2011 to 1.5 million bpd and that Tehran may need to shut in production.
Worries about a supply disruption from Iran had boosted oil prices to a high of over $128 a barrel In March. Prices have come off those highs, and are nearly down 25 percent in part due to increased supplies by Saudi Arabia and concerns about a slowdown in the global economy.
Unipec, the trading arm Sinopec Corp, requested Iran to deliver July-loading crude cargoes to Chinese ports, sources said. One source estimated Sinopec will lift about 500,000 bpd for July, a level similar to the average amount the top Asian refiner bought from Iran last year.