SINGAPORE/WASHINGTON - The United States has renewed waivers on Iran sanctions for Japan and 10 European countries because they cut their purchases of the OPEC nation's crude oil, Secretary of State Hillary Clinton said on Friday.
The renewal means banks in the 11 countries have been given a second 180 day reprieve from the threat of being cut off from the US financial system under the sanctions designed to choke funding to Iran's nuclear program.
The West suspects Iran is trying to develop nuclear weapons. Tehran insists the program is for civilian purposes.
The sanctions law President Barack Obama signed in 2011 requires a review every six months of the waivers, which were given to all of Iran's major buyers throughout 2012.
Japan, the world's third largest oil consumer, had taken significant steps to reduce purchases of Iranian crude, Clinton said.
The cuts were "especially notable considering the extraordinary energy challenges" Japan faced after the 2011 Fukushima nuclear disaster, she said in a statement. Since then, Japan has had to burn more diesel fuel.
In March, Japan was the first of Asia's top four buyers of Iranian crude to receive a US waiver from the sanctions.
Since then Japan has made deeper cuts in crude purchases from Iran.
The State Department renewed exemptions on Friday to Belgium, the Czech Republic, France, Germany, Greece, Italy, the Netherlands, Poland, Spain, and the United Kingdom. The European Union implemented a full embargo on Iranian crude and petroleum products on July 1.
The combination of US and European sanctions has forced Iran to cut its oil output and almost halve exports.
Since it won its first waiver, Japan has cut imports each month by more than a quarter except for an increase of 6.8 percent in June. It completely halted shipments in July.
The United States next granted waivers to South Korea and India on June 11. Their renewals are due in December.
Since Washington issued those exemptions, official data from Seoul has shown imports fell by a quarter in June and by 42 percent in July and may halt in August.
The decline was spurred by European Union sanctions banning insurance coverage for ships carrying Iranian oil. While South Korea's shipments are expected to recover in September as Seoul asks Iran to ship the oil, three months of sharp cuts put the country in a strong position to secure a renewal come December.
"To get an extension on the waiver, we need to show only the import record for six months" (since the waiver was granted), said a South Korean economy ministry source with direct knowledge of the matter. "We reduced the imports more than we had promised to the United States."
He declined to specify what the level of the officially-agreed reduction was.
Because of the EU embargo affecting shipping, India's imports also fell, sliding 18 percent in June from a year earlier and 40 percent in July.
India's case to secure an extension is strong because the overall cuts have been more than was anticipated, an official at the country's oil ministry said.
China, Iran's largest oil customer and top trading partner, was the last of the top Asian buyers to secure the waiver on June 28. Official data subsequently released showed China's imports surged in June to an 11-month high. But they fell in July by 30 percent from a year earlier.
Wider politics, not the oil trade alone, will determine Washington's review of the waiver for China. Beijing has repeatedly opposed the sanctions, which it views as unilateral moves made outside the framework of the United Nations.
The decision on China will also depend on whether the United States wants to tighten current sanctions on Iran by then.
"It really depends on the US policy by then, if they want to maintain or step up the pressure on Iran," said a Chinese oil trading official who deals with Iranian oil. "The topic of a waiver has long gone beyond the commercial level."
In all, Japan, China, South Korea and India - the top four buyers - have cut imports from Iran by a fifth in the first seven months of the year compared to a year earlier. The steepest reduction is by Japan at 39 percent.
The steep cuts in the first half of the year and expectations of an extension have already prompted Japan, South Korea and China to plan take the full volumes of Iranian oil to which they committed under annual term contracts for September.
But imports will average out significantly lower than last year.