Japanese refiners are tapping more oil from the Middle East after the United States ended all waivers from sanctions on Iran starting from this month.
Fuji Oil Co bought 1.5 million barrels of Oman crude. Banoco Arab Medium from Bahrain. and Upper Zakum. an Abu Dhabi grade. to load in June in a spot tender held last month. according to trade sources.
`Alternative supplies to Iranian oil for Japan are likely to come mainly from the Middle East given the existing supply chains.` Takayuki Uematsu. senior executive officer at Cosmo Energy Holdings Co Ltd. told an earnings news conference.
Alternative imports are not expected to come from the United States – now the world`s largest producer – as the U.S. crude is lighter than Iranian crude. Uematsu added.
Iranian oil accounted for about five percent of Cosmo`s total procurement. and Japan`s third-largest refiner feels confident it will be able to secure enough supply from other sources. he said.
Fuji Oil Co President Atsuo Shibota said he also does not see any problems in securing oil supplies from sources other than Iran but he expects it may raise costs by as much as 100 million yen a month for the company.
Fuji plans to secure alternative crude supplies through term contracts and by tapping the spot market. he said.
`We are in a situation where we can buy crude from the free market. so we don`t expect supply disruption even without Iranian oil.` Shibota told an earnings press conference. declining to say what suppliers Fuji would tap.
Takahiko Yamamoto. a Fuji Oil director. told Reuters after the press conference that the refiner had already secured most of its supplies for June. mainly through the spot market.
Fuji Oil said Iranian oil accounted for about 20 percent of the company`s supplies in the financial year through March. down from around 30 percent the previous year.
The United States reimposed sanctions on Iran in November after pulling out of a 2015 nuclear accord between Tehran and six world powers last year. although it allowed Tehran`s biggest buyers to continuing buying some crude oil via waivers for another six months.
The sanctions have more than halved Iranian oil exports to 1 million barrels per day (bpd) or less. Washington. though. aiming to cut Iran`s sales to zero. said in April all sanctions waivers for those importing Iranian oil would end at the beginning of May.
Iran says its oil exports will not drop to zero. although its officials are bracing for a drop in shipments.