Japanese refiners could resume oil imports from Iran as early as three months after confirming Iranian sanctions were being lifted, Petroleum Association of Japan President Tsutomu Sugimori said May 27.
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In the event of confirmation of the lifting of sanctions, "that's when we start our consideration and [the resumption of Iranian oil imports] could come as early as in three months," Sugimori told an online press conference.
Without confirmation of the sanctions lifting, Japanese refiners would not consider resuming Iranian oil imports, said Sugimori, who is also chairman of ENEOS Holdings. He added that ENEOS had yet to proceed with detailed consideration of resuming Iranian oil imports.
Sugimori's comments came after Iranian President Hassan Rouhani said May 20 a "main agreement" has been made to reinstate a nuclear deal as the US has broadly committed to lifting its sanctions targeting Iran's oil, petrochemical and shipping sectors.
Japan's top three refiners ENEOS, Idemitsu Kosan and Cosmo Oil said May 21 that they would carefully consider the potential resumption of Iranian oil imports once there was confirmation of sanctions being lifted.
"Although it depends on the formal decision of lifting the US sanctions as well as the details, we will closely coordinate with the Japanese government, financial institutions and shipping companies," an Idemitsu Kosan official said.
Japan suspended its Iranian oil imports in May 2019 after briefly resuming imports in February for the first time in four months, as the US did not extend its 180-day sanctions waiver to eight countries, including Japan, beyond early May.
Japan's 2019 Iranian oil imports totaled 17.10 million barrels, down 63.2% from 46.51 million barrels in 2018, according to the Ministry of Economy, Trade and Industry data.
The return of Iranian condensate, as well as many other crude grades, to the market will likely set the stage for new competition for the Asian demand pie, prompting major producers to make competitive offers, which would significantly enhance Asian refiners' feedstock economics and overall product margins, according to refinery officials and trading sources in China, South Korea, Japan, Hong Kong and India.
The official selling price spread for Iranian Light against Arab Light crude for loading in June is minus 20 cents/b, the biggest discount for the Iranian grade against the Saudi oil price since it reached minus 35 cents/b for cargoes loaded in March 2020, Platts data showed.
The outright price spread between South Pars and Australia's North West Shelf condensate has averaged minus $5.83/b to date in 2021, wider than the average spread of minus $3.04/b in 2020, minus $1.42/b in 2019 and minus 12 cents/b in 2018, Platts data showed.
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