Japan Agrees to Reduce Iranian Oil Imports

Japan follows Europe and the United States in imposing an oil embargo although it is quite dependent on Iranian crude.

Japan on Thursday vowed to take “concrete” steps toward reducing its dependence on Iranian oil as the United States allied their Asian ally to put pressure on Tehran which they suspect is developing a nuclear weapons capacity.

Japan’s pledge is an encouraging sign for American foreign policy after China rebuffed sanctions aimed at starving the Iranian regime of the oil sales that provide 85 percent of its government revenue. Along with India, China and Japan account for more than 40 percent of Iran’s oil exports.

The European Union, another major buyer, has already committed to banning imports of Iranian oil. An embargo is expected to come into effect late in January.

The United States have lobbied Japanese and South Korean officials for months to reduce their Iranian oil buys. For each nation, Iranian crude makes up roughly 10 percent of their petroleum imports.

Japan’s finance minister cautioned that his nation wouldn’t be able to stop buying Iranian oil overnight. After a devastating tsunami and earthquake last year, Japan is struggling to build its economy. It is heavily dependent on foreign energy buys, especially as its nuclear industry is under pressure after the accident at the Fukushima power plant in March.

The United States have already banned Iranian oil imports. President Barack Obama imposed sanctions on its central bank and financial institutions that do business with it before the New Year’s. Japan hopes to secure a waiver for its banks from these punitive measures by supporting a Western oil embargo.

Iran insists that its uranium enrichment program serves no military purposes and staged naval exercises in the Persian Gulf earlier this year to try to stave off further international pressure. It has threatened to shut the narrow Strait of Hormuz through which passes 40 percent of the world’s seaborn oil transports every day.

Even if the United States don’t buy Iran’s oil, they are heavily dependent on exports from the other side of the Persian Gulf where Saudi Arabia’s oil industry is concentrated. A disruption in oil shipments could cause prices and insurance costs to rise but also hurt Iran’s economy as it may no longer be able to export to oil buyers in Asia while the US Navy tried to break an Iranian blockade of the Strait.