SEOUL, South Korea (AP) — Japan, South Korea and other major oil importers welcomed Tuesday the decision by the Trump administration to let them continue to import Iranian crude oil and other petroleum products despite the re-imposition of sanctions on Tehran.
The risk of excessive disruption to world markets was a key factor behind the decision to allow exemptions for some of the biggest, most oil-thirsty economies. It appeared to have paid off.
As of midday Tuesday oil prices had fallen moderately, with benchmark U.S. crude down 0.3 percent and Brent crude, which is used to price international oils, down nearly 0.4 percent. The fear was that the sanctions deadline would have pushed oil prices sharply higher.
Five of the eight economies granted waivers are in Asia: China, India, Japan, South Korea and Taiwan. The others were Greece, Italy and Turkey.
Japan said it was pleased to be temporarily spared from possible penalties for importing Iranian oil. Chief Cabinet Secretary Yoshihide Suga told reporters Tokyo was analyzing the potential impact and was in close consultations with the U.S. on protecting Japanese companies from “adverse consequences.”
Faced with the Nov. 5 deadline for re-imposing sanctions, the major importing countries had been winding down their purchases, which have dropped in recent months by more than a million barrels of crude per day. That deadline has now been extended.
Still, South Korean Trade Minister Kim Hyun-chong said Tuesday that the waiver had “opened breathing room” for South Korea’s oil refining industry, which relies on imports of a very light crude oil called condensate.
The waiver also is a relief for South Korean companies that export to Iran: The U.S. also agreed to uphold a special transaction system set up in October 2010 after discussions between Washington and Seoul that essentially allows South Korea to take Iranian oil as payments for its goods.
With the U.S. upholding the transaction system, South Korean companies will be able to continue exporting non-sanctioned items to Iran, officials said.
India has a similar arrangement whereby Iran can use crude oil to pay for food and other necessities.
For both Japan and China, Iran is a significant but not huge supplier. Saudi Arabia, the United Arab Emirates, Russia, Qatar and Kuwait export more crude oil to Japan than Iran.
China is the single-largest importer of crude oil, at about 9 million barrels a day, and also of Iranian oil, so cutting off all shipments could have jolted global markets.
But China has diversified and relies on Iran for less than 10 percent of its total crude oil imports, with Saudi Arabia, Angola, Russia, Oman and Iraq providing more than half, according to the U.S. Energy Information Administration.
Associated Press writers Mari Yamaguchi in Tokyo and Elaine Kurtenbach in Bangkok contributed.