As tension mounts worldwide over the standoff concerning Iran’s nuclear ambitions, Japanese oil companies are starting to take precautions as uncertainties surrounding the situation may force them to stop importing oil from the Islamic state.
On Wednesday, Nippon Oil Corp. said it will reduce its oil imports from Iran to 120,000 barrels a day from 142,000 a day in 2005 and purchase from other countries. It was the first such announcement by a firm in an industrialized nation.
Nippon Oil’s move came as negotiations intensify in the U.N. Security Council over the drafting of a resolution that denounces Tehran’s uranium enrichment activities, which many countries suspect are a cover for making nuclear weapons.
Although another major Japanese oil company, Arabian Oil Co., said it has no plans at the moment to follow in Nippon Oil’s footsteps, the company said it is taking precautions.
“We are considering other ways to ensure a stable supply, such as increasing imports from other countries, in the event of an emergency,” said Masatoshi Kasuya, a spokesman for AOC Holdings Inc., Arabian Oil Co.’s holding company.
He declined to say how much oil the firm imports from Iran, citing company policy, but a top official of AOC Holdings recently said AOC “would be in a fix” if economic sanctions were to be slapped on Tehran.
Iran supplies 16 percent of Japan’s oil and is the third-largest crude exporter to Japan, after Saudi Arabia and the United Arab Emirates.
Koichiro Tanaka, director of the Japanese Institute of Middle Eastern Economies at the Institute of Energy Economics, said tension surrounding Iran is likely to grow, noting the ongoing talks at the Security Council may lead to economic sanctions.
“Japanese companies may not be able to import oil from Iran due to the political climate,” he said. “It is natural for companies to take precautions to ensure a stable supply.”
Despite the growing concern over Iran, experts say it is still early to worry about a possible decrease in the worldwide oil supply that might result from sanctions or Tehran’s refusal to sell oil.
Saudi Arabia is considering increasing output from the current 11 million barrels per day to about 12.5 million, which would provide enough oil for the time being, according to Akio Shibata, deputy director at Marubeni Research Institute.
“The Iran crisis may lead to economic sanctions (by the U.N.) or even to air raids on Iran,” he said. “But it will still take a year or so for things to proceed to that stage.”
In the meantime, he added, other Japanese oil companies seem to be carefully monitoring the political tug-of-war in the international arena before making the next move.