The Bank of Tokyo-Mitsubishi UFJ (BTMU), Japan’s largest bank, has resumed transactions with Iranian banks, including payments for Iranian crude oil bought by Japanese refiners, a company official told Platts.
BTMU’s move follows the lifting of nuclear sanctions against Iran by the US and EU on January 16.
This was followed by Japan lifting its key sanctions against Iran, including its ban on Japanese banks dealing with Iranian banks, on January 22.
The Iranian crude comes at a time when Japanese refiners have more choices for crude, at lower prices.
Not only have outright crude prices fallen, but Saudi Aramco has lowered its price discounts in order to hold onto market share in Asia.
While the bank is still rigorously complying with existing US sanctions, including a ban on any US dollar transactions, BTMU can now handle Japanese refiners’ Iranian oil payments in the Japanese yen and euros, the official said.
The restart of BTMU’s Iran oil transactions would give Japanese refiners the option to pay in yen or euros, depending on the preferences of refiners or the National Iranian Oil Company.
BTMU handled most of Japan’s payments for Iranian oil prior to the sanctions in mid-2012, according to industry sources.
NIOC Prefers Euros
NIOC has said that it prefers to receive its oil payments and debt repayments in euros, an official at NIOC was quoted as saying Saturday by Iranian state news agency IRNA.
“Iran’s first priority is to receive the oil money and debts in the euros,” Safarali Keramati, deputy NIOC director for international affairs in charge of marketing and crude oil operations, was quoted as saying.
Keramati did not say whether Iran would set the euro as its preferred currency in its crude oil contracts -- that would depend on the buyers’ preference too -- but NIOC would prefer to receive oil money in euros, he said.
NIOC has considered several currencies for this purpose, he said. During the sanction years since mid-2012, Japanese refiners have been making their Iran oil payments in yen via an account held by the Bank of Japan, according to industry sources.
BTMU is restarting its Iranian transactions at a time when a number of Japanese refiners are gearing up to renew their annual term contracts starting in April.
Earlier Tuesday, one Japanese refiner source said it was looking into renewing its annual Iranian term crude import contract beyond April in the yen if there were no other options.
Japan’s crude imports from Iran plummeted in recent years to an average of 170,360 b/d in 2015, compared with an average of 313,480 b/d in 2011.