Japan, US close to agreement on refiners' cuts on Iran crude

Japan and US are close to agreeing on the size of cuts refiners would need to make in imports of Iranian crude oil to win waivers from US sanctions, according to two ministers yesterday, after a media report said the two sides would settle on an 11 per cent cut, according to a Reuters report.

The Yomiuri newspaper, which cited unidentified sources, said Japan and the US reached an agreement during talks last week over the size of cuts to crude imports from Iran, and a formal deal was expected by the month end.

Avoiding sanctions was essential to protecting the Japanese financial sector's operations abroad. However, cutting oil imports could be a risky proposition for the Japanese economy.

Japan's reliance on oil imports has increased after last year's earthquake and tsunami triggered the Fukushima radiation crisis, resulting in shutting down of all nuclear reactors at Japanese power plants.

"We are closely negotiating with the United States and are moving forward towards mutual understanding, but it is not the case that we have reached a conclusion," Trade minister Yukio Edano told reporters.

Meanwhile, Washington is going ahead with imposing sanctions as it feels Iran's nuclear programme would lead to development of nuclear weapons.