Japan's leading banks will be able to issue letters of credit (L/Cs) for Iranian oil transactions after receiving final regulatory clearance.

This paves the way for the resumption of deliveries of Iranian crude to Japanese refineries, probably later this month.

Waiver uncertainty

In November 2018 Japan was one of eight countries to receive a 180-day waiver from US sanctions.

It expires in early May, when the country will be expected to cut purchases significantly.

But uncertainty over rules for shipping insurance has caused Japanese refiners to avoid loadings of Iranian oil for January despite the waiver since November.

Admissible L/Cs

Japanese banks will be able to issue L/Cs for admissible deals after the clearance from the Japanese and US regulatory authorities, according to an anonymous source quoted by S&P Global Platts.

It reports that the banks are expected to accept payment by Japanese refiners for importing Iranian oil, mainly in yen.

Japan's major refiners, including JXTG Holdings and Cosmo Oil, have told Platts that they intend to resume loading oil from Iran at the end of January.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.