Japan's policy on Iranian oil was left in doubt on Friday after the prime minister distanced himself from the finance minister's pledge to reduce oil imports in support of a U.S. push to prevent Iran from making nuclear weapons.
Prime Minister Yoshihiko Noda said the pledge, made by Finance Minister Jun Azumi only a day before in a joint press conference with U.S. Treasury Secretary Timothy Geithner, was Azumi's personal opinion and that the government wants to discuss the matter with the business community.
The foreign minister and the government's top spokesman also made comments suggesting Japan was not yet committed to reducing Iranian oil imports, which could potentially damage the credibility of its foreign policy and its dealings with the United States, its most important ally.
The outlook shared by Finance Minister Azumi, I believe, was a personal one, Noda said in a press conference.
Going forward, the government will deal with this issue by conducting working-level discussions.
U.S. Treasury Secretary Timothy Geithner travelled to China and Japan this week, seeking cooperation on stricter sanctions as the U.S. tries to choke off oil revenue to Iran, an OPEC member and the world's fifth-largest crude exporter.
Iran denies Western suspicions that its nuclear programme has military goals, saying it is for purely peaceful purposes. Washington has rejected Iran's assertion and has pressed ahead with new sanctions.
Other countries, including major Iran oil buyers such as South Korea and India, are also scrambling to react to the new sanctions law as countries fear that conduits for Iranian oil payments could snap under the U.S. pressure.
Buying less Iranian oil is sensitive for Japan because its reliance on energy imports has jumped after the Fukushima nuclear disaster last year.
But unless it does so, it will not win an exemption for Japanese banks from sanctions that would freeze financial institutions out of U.S. markets for facilitating trade in Iranian crude.
On Thursday, a few hours after Azumi pledged to take concrete steps to lower oil imports, Chief Cabinet Secretary Osamu Fujimura said importing less Iranian oil was only one of many opinions on how to deal with the matter.
Foreign Minister Koichiro Gemba also said on Friday the government hasn't reached a decision, Kyodo News said.
Iranian crude makes up 10 percent of Japan's overall oil imports and some in Japan are concerned the new sanctions could drive up oil prices, dealing a blow to its economy, which is recovering from last year's earthquake and nuclear power disaster.
Separately, Gemba said in a joint news conference with French Foreign Minister Alain Juppe that sanctions would be ineffective if they end up boosting oil prices, a negative development for the global economy, but a boon for oil producing Iran.
The higher oil prices go, the better it gets for Iran ... We need to take steps in a careful, smart way, he said.
Juppe, however, said he did not fully share Gemba's concerns, saying that when there was a similar situation with Libya, there was not much of an increase in oil prices and that there were other countries to turn to for oil.
Iran faces the prospects of cutbacks in oil sales to China, Japan and India, its top three buyers who together take more than 40 percent of its crude exports. The European Union, a major buyer, has committed to banning imports of Iranian oil.
President Barack Obama authorised a law on December 31 imposing sanctions on financial institutions that deal with Iran's central bank, the country's main clearing house for oil payments.
The United States can waive some institutions if it deems it necessary for energy market stability or if the institutions' home country significantly reduces trade with Iran.
(Additional reporting by Kiyoshi Takenaka and Shinichi Saoshiro; Editing by Edwina Gibbs and Neil Fullick)