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Ahead of U.S. Sanctions, Japan to Stop Importing Iranian Oil as Rial Hits New Low

Japanese oil wholesalers have said that they will stop importing Iranian oil next month ahead of United States sanctions that will be reimposed on the sector in November, Radio Free Europe/Radio Liberty (RFE/RL) reported Monday. News of the Japanese decision comes as Iran’s rial has hit a new low against the U.S. dollar.

When President Donald Trump announced the U.S. withdrawal from the 2015 nuclear deal with Iran in May, he said that the U.S. would reimpose different sets of sanctions that were suspended due to the deal in August and November. The November sanctions will target Iran’s banking and oil export sectors. The administration has said that the goal of the latter sanctions is to bring Iran’s oil exports down to zero.

Japan’s government had sought a waiver from the U.S. to allow it to import Iranian oil. However, Japan’s oil importers will now look to other Middle East markets to replace the Iranian oil.

A spokeswoman for Showa Shell Sekiyu, a Japanese crude oil wholesaler, told Agence France-Presse that the company would  “observe a government decision” regarding Iranian oil.

Japan relies on oil imports and gets most of its oil — 39% — from Saudi Arabia. Iran has been Japan’s sixth biggest supplier at 5%.

In the face of U.S. sanctions, several major oil companies, including France’s Total, have stopped doing business with Iran.

The news that Iran would be losing one of the biggest customers of its oil comes at a time that Iran’s economy is suffering the effects of renewed U.S. sanctions. Reuters reported on Monday that Iran’s rial hit a new low, trading at 128,000 to a dollar. That marks a drop of 60% in the value of the currency since March, when it was valued at 50,000 to a dollar.

In late July, Bloomberg reported that the precarious nature of Iran’s economy was due to sanctions as well as “mismanagement and corruption.”

As Iran’s economy continues to deteriorate, French Foreign Minister  Jean-Yves Le Drian said last week that Iran “cannot avoid” discussing its ballistic missile program and its destabilizing behavior in the Middle East.

[Photo: AlfvanBeem / WikiCommons ]