Japan cuts April Iran oil purchases 77 percent

Japan will slash its crude purchases from Iran by almost 80 percent in April compared to the first two months of the year as buyers comply with Western sanctions, trade sources said, Reuters reported. The cuts, amounting to 250,000 barrels per day, are the steepest yet by the four Asian nations who buy most of Iran's 2.2 million bpd of exports, as tightening sanctions make it tough to pay, ship and insure the oil. The United States and Europe are trying to squeeze the revenues Iran makes from its oil exports to force it to halt a nuclear program they fear will be used to make weapons but which Tehran says is for power generation. Japanese buyers will load just 75,000 barrels per day (bpd) of oil from Iran in April, trade sources said, down 77 percent from the average imports of 322,900 bpd in the first two months of the year. Customs data is not yet available for March. The sources declined to be identified because they are not authorized to talk to the media. Japan in January imported 122 million barrels of oil, with Saudi Arabia supplying about 41 million, followed by United Arab Emirates which pumped just over 26 million. Third-largest supplier Iran shipped 10.5 million barrels to Japan that month. Japan's biggest buyers of Iranian oil, Showa Shell Sekiyu KK and JX Nippon Oil & Energy Corp, are likely to load four cargoes amounting to 2.25 million barrels in April, the sources said, with shipments arriving this month and next. Both companies declined to comment. EU measures ban Europe's insurers, the providers of around 90 percent of the world's tanker insurance, from giving cover to Iranian oil exports anywhere in the world, and Japanese insurers have also imposed their own shipping restrictions. The EU sanctions on insurance apply to new oil contracts struck since January 23, and to all contracts after July 1. Japan's Iranian oil buyers are in negotiations to renew annual contracts that run from April through March each year. Last year, at least 10 tankers a month called at Iranian ports to lift oil for Japan. In April, three or four tankers are expected to load, traders said. Japan and South Korea have lobbied for exemptions to allow them to continue shipping reduced volumes of crude, but insurance and shipping executives say a complete ban now looks likely. The threat of a cut in Iranian supplies drove oil prices in March to $128 a barrel, their highest level since 2008. Investment bank JP Morgan estimated Iran's output may fall 1 million bpd by the end of June as refiners cut imports.