Japan's major distributors mull halt in oil imports from Iran

Major Japanese oil distributors are considering halting oil imports from Iran in response to U.S. demands, sources familiar with the plan said Thursday.

Oil companies are planning to make up for the shortfall by increasing purchases from other Middle Eastern suppliers such as Saudi Arabia as imports of Iranian crude oil will likely stop by around October, the sources said.

For consumers in resource-poor Japan, the change would mean higher prices for gasoline and related products due to higher procurement costs.

The suspension also comes amid the prospect that transaction settlements will be made difficult as major banks such as MUFJ Bank and Mizuho Bank are considering halting Iran-linked businesses following the U.S. decision to reinstate sanctions against Tehran.

Crude oil from Iran, which traditionally has stable diplomatic relations with Japan, is relatively cheap compared with from other countries. It accounts for around 5 percent of Japan's annual crude oil imports.

The United States has been calling for a halt to oil imports from Iran by Nov. 4. Some countries such as China have rejected the U.S. calls and Japan is seeking a waiver.

U.S. Secretary of State Mike Pompeo indicated earlier this month that Washington will consider requests from some countries that they be exempted from the U.S.-led ban but it remains uncertain whether Japan will be given an exemption.

U.S. President Donald Trump has hardened his stance toward Iran and withdrawn his country from an international nuclear deal.

Under the 2015 deal struck between Iran and six major powers -- Britain, China, France, Germany, Russia and the United States -- Tehran agreed to curb its nuclear activities in exchange for the lifting of crippling economic sanctions.