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Japan Curbing Iran Oil Imports

Seeing supply disruption on the horizon, Japan is seeking to diversify it's oil supply away from Iran, according to an Iran Oil Gas Network report.

Imports from Iran tumbled 20 percent to 2.18 million kiloliters last month, bringing the decline to 14 percent for the four months ended April 30, according to Trade Ministry data. Japan brought in more oil from Saudi Arabia and the United Arab Emirates, the ministry said in a report released in Tokyo today.

Iran said it is pressing ahead with its uranium enrichment program in defiance of demands by the United Nations for a halt to the work. The U.S. said it suspects the research is a cover for building a nuclear weapon. Japan seeks to lessen the impact of any upset to supplies because it depends on imports for almost all the oil it needs to fuel the world's second-largest economy.

"High dependency on Iran is a disadvantage'' at the moment, Ken Koyama, senior research fellow at the Institute of Energy Economics Japan, said by phone. "Japan needs to think about ways to diversify its supply sources.''

Meanwhile, Japan has picked up the slack by increasing imports from Saudi Arabia and the UAE by 15% and 11% respectively. It is a long-term strategic move by Japan rather than a short term redress, as evidenced by a comment from a Mitsubishi executive.

"The tensions over Iran may ease a little but it won't go away,'' said Anthony Nunan, assistant general manager of international petroleum business at Mitsubishi Corp. in Tokyo.