0640 GMT March 26, 2019
The US and Europe lifted an economic embargo in January in exchange for Tehran agreeing to modify its nuclear program. Since then, Iran's crude oil output has gradually been climbing to where it was before. The country now pumps 3.6 million barrels a day. Countries such as China and India, whose demand for oil is still growing, are increasing their purchases of Iranian oil, Nikkei wrote.
Even after the European Union tightened sanctions in 2012, Japan continued to import oil from Iran. The Japanese government set up a new system to compensate Japanese oil importers for losses resulting from accidents involving tankers carrying Iranian oil. Such losses are usually covered by private reinsurers.
For the current fiscal year, the government raised the maximum compensation per tanker to slightly over ¥900 billion ($8.92 billion) from around ¥800 billion in the previous year. The number of tankers covered by the framework increased from 15 to 19.
Since last summer, when negotiations for sanctions relief began moving forward, Japan has been preparing to increase Iranian oil imports. But despite the government backing, imports from Iran have not grown as strongly as expected.
According to Japan's Economy and Trade Ministry, imports rose 11 percent year on year to 950,000 kiloliters in January when the sanctions were lifted. But growth slowed sharply to one percent in February and turned negative in March. In April, imports were down 70 percent from the previous year.
The obstacle is the remaining US sanctions. Generally, insurance companies insure tankers sailing through the Persian Gulf and the oil they carry. But the remaining sanctions, such as a ban on settling trade with Iran in US dollars, limits the ability of insurers to offload risk by buying reinsurance.