Iran, Japan in talks on oil sales under US waiver

Iran has initiated talks with Japanese companies to resume oil sales, taking advantage of a temporary US sanctions waiver. This waiver, issued on June 22 as part of 60-day peace negotiations between Tehran and Washington, is set to expire on August 21. Three Japanese buyers are reportedly considering crude oil purchases from Iran, marking a potential return to the market for the first time since 2019.

Sources familiar with the matter indicate that Japanese and Iranian officials are engaged in preliminary discussions about these potential oil sales. However, prospective buyers are seeking assurances regarding the safety of tanker voyages and are pushing for an extension of the current waiver, given the significant shipping times between Iran and Japan. The safety of passage through the Strait of Hormuz remains a concern, with past attacks and the presence of floating mines complicating maritime operations.

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any deal would require the US to extend the current waiver given the shipping time between Japan and Iran.

Japan, along with other countries like South Korea, India, and European nations, had ceased buying Iranian oil following the tightening of US sanctions after President Donald Trump's withdrawal from Iran's nuclear pact in 2018. China has been Iran's primary oil customer in recent years. Any resumption of sales to Japan would primarily involve private companies, and the feasibility of such deals is contingent on factors like shipping logistics and existing contracts.

Securing insurance for oil tankers is identified as a major challenge for Japanese refiners. The current temporary waiver is considered unlikely to generate immediate orders due to these logistical and security hurdles. Iran's national oil company, NIOC, has approached traditional customers, including Japan, expressing a desire for them to resume purchases should sanctions be lifted following a peace deal.

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Securing insurance would be the biggest challenge.