Japan Cuts Iran Oil Imports Further; Europe, Taiwan Follow Suit

Japan slashed its oil purchases from Iran in April, the second time it has done so this year, cutting imports from the Islamic Republic by nearly 80 percent.

According to a report from Reuters on Wednesday, Japan is reducing its importation of Iranian oil by 250,000 barrels per day before restrictive sanctions from the United States and the European Union hit Tehran in July.

Japan already won an exemption from the U.S. sanctions -- and it is still the only Asian nation to have done so -- after it cut Iranian imports by 20 percent earlier this year, buying oil instead from Saudi Arabia and the United Arab Emirates.

Japan's largest crude refinery, Showa Shell Sekiyu, renewed its contract with the National Iranian Oil Company on Wednesday, Iran's semi-official Fars news agency reported, but it cut the purchase volume by an undisclosed amount. Last year Showa Shell imported about 100,000 barrels per day, but Reuters suggests that the company could reduce that figure by 15 to 20 percent.

Taiwan also cut its Iranian imports, and European countries reduced their April purchases by 75,000 bpd, Reuters reported.

The new American sanctions will force foreign governments to choose between doing business with either Iran or the United States, and a number of countries -- including China and South Korea -- have been reducing their imports from Iran since the start of the year, when the sanctions were approved by President Barack Obama. The sanctions make it harder to pay for, ship and insure oil.

The EU has also approved a total embargo of Iranian oil beginning this summer. Tehran is pre-empting the measures by stopping all exports to some European countries, including France, Spain, Italy and Holland.

Iran is also selling oil at a discount, offering it at zero-percent interest for six months to a handful of potential customers in Asia, including India, which last week surpassed China as the top buyer of Iranian crude.

The credit amounts to about $1.20 to $1.50 a barrel, or a 7.5 percent discount at today's prices.