Japan's May Iran crude imports slide ahead of sanctions

Japan’s May Iran crude imports slide ahead of sanctions

Japan's Iran crude imports dive in April

Imports fall 46.5 pct y/y before EU restrictions on Sunday; Overall oil purchases increase; Nominations for June, July at about 12,000 bpd

June 28, 2012 1:35 by Reuters

Japan’s crude imports from Iran almost halved in May from a year ago as refiners in the world’s third-largest economy lifted less oil in advance of an EU ban on insurance for shipments from the Middle Eastern country that goes into effect on Sunday.

Customs-cleared imports of oil from Iran fell 46.5 percent in May from a year earlier to 106,162 barrels per day (523,233 kilolitres), data from Japan’s Ministry of Finance showed on Thursday. They fell 7.4 percent from 118,450 bpd in April.

Japan has been cutting purchases from Iran before the insurance ban starts even though its demand for oil has risen to fuel power plants after all the country’s nuclear stations were shut down in the wake of the Fukushima disaster.

Overall crude imports rose 7.1 percent to about 3.4 million barrels a day in May, according to the ministry.

Iranian oil accounted for nearly 9 percent of Japan’s crude imports last year. Japan has reduced the flow already to comply with U.S. sanctions requiring buyers to make sizeable cuts.

Iran acknowledged for the first time on Wednesday that its oil exports have fallen sharply, down 20-30 percent from normal volumes of 2.2 million barrels daily.

Crude buyers in Japan, South Korea, China and India, Iran’s biggest Asian customers, have had to cut shipments because they rely on European insurers to cover liabilities for accidents and oil spills.

Around 90 percent of the world’s tanker fleet is covered by Western-based protection and indemnity (P&I) clubs, which insure against personal injury and environmental clean-up claims.

Japan’s parliament last week passed a law that provides coverage for shipments from Iran, the first country to try to get around the insurance ban, but buyers held off from making significant nominations for next month.

Japan nominated loadings of 120,000 bpd for both June and July, sources said, unchanged from May but down significantly from a year earlier, to comply with sanctions against the Islamic Republic.

The United States and the European Union accuse Iran of trying to build nuclear weapons. Tehran says the programme is strictly for civilian purposes.

(Reporting by Osamu Tsukimori; Editing by Aaron Sheldrick and Ed Davies)