Three Japanese firms begin talks to buy Iranian crude

Three Japanese companies have begun preliminary talks with Iran over crude oil purchases after Iran secured a temporary lifting of oil sale restrictions through ceasefire negotiations with the United States.

Reuters reported Thursday, citing Iranian sources, that three Japanese buyers are currently considering purchasing Iranian crude. A Western industry source also said Japanese and Iranian government officials are holding early-stage talks on the possibility of oil sales.

The US Treasury Department issued a 60-day temporary general license on June 22 — while ceasefire talks between the two countries were under way — authorizing the production, delivery and sale of Iranian crude oil.

During the exemption period, Iran may sell its crude and receive payment in US dollars. The waiver is valid for 60 days only, meaning Iran can export crude only through Aug. 21.

Japan was once among the largest importers of Iranian crude, alongside South Korea, India and European nations.

That changed after President Donald Trump unilaterally withdrew from the Iran nuclear deal in 2018 and reimposed economic sanctions, prompting Japan to halt Iranian crude purchases starting in 2019. China has since become the dominant buyer of Iranian oil.

Japan is seeking safety guarantees for oil tankers from Iran before committing to any purchase, suggesting that an actual resumption of imports will take time.

An official at Japan's Ministry of Economy, Trade and Industry said last month that while purchasing Iranian crude is a matter for private companies, Iran must guarantee safe passage for tankers.

The same official added that it remains uncertain whether an actual oil sales deal with Iran will materialize, given shipping times and existing contracts.

A senior executive at a Japanese refinery said securing insurance would be the biggest hurdle.

A senior Iranian official said that if a deal proceeds, crude would be loaded at Kharg Island, home to Iran's largest oil terminal, and Japanese-operated tankers would be used.

The official added that given the transit time for crude shipments from Iran to Japan, the sanctions exemption would need to be extended for any deal to go through.