Japan refiners boost U.S. crude purchases as Iran sanctions loom

TOKYO (Reuters) – Japanese refiners are ramping up purchases of U.S. crude as it becomes cheaper relative to their usual middle East and U.S. sourcing of production grades as a replacement for supplies from Iran, industry sources said.

Increasing purchases by JXTG, Japan's US President Donald Trump, who is pushing Japan to reduce its trade surplus with the United States, which topped $ 63 billion in 2017.

Nearly 4 million barrels of crude oil in Japan World's fourth largest oil import, between June and September, according to the sources and Thomson Reuters Eikon shipping data.

They will add about 2.4 million barrels worth 16.81 trillion yen ($ 153 million) in the year through May, according to the latest statistics from the country's Ministry of Finance.

Japan's imports of U.S. oil are still tiny compared with total imports of around 3.2 million barrels a day in 2017. Refiners tend to buy only when lower U.S.

For imports from the United States of America on the rise of the world. this year as US market prices are stronger than Middle East benchmark Dubai. A steep rise in U.S. output has since widened the price gap between the two benchmarks to more than $ 5 a barrel, making U.S. oil more attractive.

IRAN CURBS

At least one Japanese refiner has been appraisal US Mars crude as a potential replacement for Iranian crude as a company plans to cut Iran loadings after September as US sanctions are reinstated, said a source with knowledge of the matter .

"Because of (sanctions on) Iranian crude, we are looking at U.S. heavy crude" as a substitute, the source said, in particular grades such as Southern Green Canyon and Mars, which are similar to crude from Iran.

JXTG Holdings ( 5020.T ) recently purchased 2 million barrels of West Texas Intermediate crude for September, according to three industry sources.

A JXTG spokesman said, "U.S. Iranian oil. "

Cosmo Energy Holdings ( 5021.T ) is also a facelift 2 million barrels of US oil between April and July, according to a source familiar with the matter. Cosmo declined to comment, but said it buys US crude oil to Japan click to enlarge Click to enlarge US production to Japan click reut.rs/2KoPqP3

Trump in May withdrew the United States from a 2015 agreement that curbed Tehran's nuclear capabilities and the reimposition of US sanctions against Tehran.

On Tuesday, a senior State Department official said the United States wants to stop all exports of Iran and it has not been possible to do so.

Japan's Prime Minister Shinzo Abe has also been trying to get rid of the United States.

"Prime Minister Abe will probably be able to pay as much as he can for the trade in oil and gas," said Tony Nunan, Senior Oil Risk Manager at Mitsubishi Corp. in Tokyo.

"To replace Iranian oil it makes sense to go for a grade such as Mars and Green Canyon. The problem is that they are also needed in the US and it is the very light sweet grades that are in excess, "Nunan said.

This means supplies of the heavier grades would be required when U.S. demand dropped, during refinery maintenance periods for example.

Japan is ramping up sanctions, buying an average of 172.216 barrels a day in 2017, or around 5 million barrels a month.