The Euro zone threats is now in a full force to covering Iran under its impact as Belgium, the Czech Republic and the Netherlands have stopped buying Iranian oil and Greece, Spain and Italy are cutting back on their purchases.
The main fact behind this is due to US sanctions regime against Iran that menaced Iran with a virtual embargo of its economy. US push the sanctions because it fears Iran might use its nuclear programme to develop nuclear weapons.
It declared that any financial institutions that deal with Iran’s central bank will punish, shutting them out of U.S. markets. A country can earn a waiver from the sanctions if it significantly reduces trade with Iran.
And for winning waivers from U.S. sanctions, Iran’s third largest customer Japan along with China is also ready to cut off oil imports from Tehran.
The size of cuts refiners to crude imports from Iran would be 11 percent. Japan will sign an agreement with US on discussion over cutting oil imports by the end of this month that is essential for Japanese financial sector.
In 2011 most nuclear reactors at Japanese power plants being shut down because of earthquake and tsunami tragedy. Therefore, Japan needs to import more oil to make up for declining use of nuclear power that it make possible only with support of US.
From last year Japan has declined its imports of Iranian crude and it is expected to cut off 8.8 percent of total oil imports. If Japan cut Iranian oil imports by 11 percent from last year’s level, as the Yomiuri reported, that would amount to a reduction of 34,430 bpd.
Reporting that matter is to be carrying on, Japan’s Foreign Minister Koichiro Gemba said, “No agreement has been reached yet. Japan is offering to continue cutting Iranian oil imports but talks are ongoing.”
However Iran ordered a halt of oil sales to Britain and France on Sunday in a move symbolic of Tehran’s anger with the European Union, starting to impose its own embargo on oil imports from Iran from July 1.
Undoubtedly U.S. sanctions would have improved its economy as the oil cut off from Iran, South Sudan, Yemen and Syria price impact on oil prices that are going to be higher basis of demand, along with investors’ appetite for riskier assets.
