28-Jun-2012 19:07By Luke Pachymuthu and Lee Yen Nee
SINGAPORE, June 28 (Reuters) - Singapore's fuel oil imports from Iran fell nearly 60 percent from their 2012 peak in June, as the city state applies pressure to oil firms to reduce trade with the Islamic Republic to win an exemption from U.S. sanctions.
The U.S. has granted waivers to major importers of Iranian crude such as India, Japan and South Korea, leaving just Singapore and China facing the threat of penalties that apply from Thursday and that could hurt the island's important financial industry.
International Enterprise (IE) Singapore, the country's trade agency, increased pressure on oil firms to reduce trade with Tehran following the visit of a senior U.S. diplomat, an official source familiar with the matter said.
"Another round of calls (was made) to re-emphasize the broader implications of doing business with Iran, the companies are receptive," the source said.
The Ministry of Foreign Affairs, referring to a previous statement issued on June 12, said Iran accounted for just one percent of the city-state’s total crude oil imports and that imports had shrunk to zero in May.
The ministry also said the central bank has asked banks to more closely monitor Iran-related business transactions.
The imports fell to 230,000 tonnes, 58.7 percent lower than the peak for the year of around 561,000 tonnes in February, according to Reuters data.
They have dropped to an average of about 294,517 tonnes a month so far this year, from 623,934 tonnes a month last year.
It is not clear why Washington, a key ally for Singapore, excluded the city state from a list of countries granted exemptions to the sanctions after cutting Iranian oil imports.
The U.S. sanctions aim to slash the flow of oil revenues to Iran to force it to curb its nuclear programme, which the West believes is being used to develop a bomb. Tehran says it needs nuclear reactors to supply elecricity.
Singapore is one of the world's biggest oil trading centres and most of its imports from Iran are of oil products rather than crude.
Fuel arriving from Iran is typically blended, stored, traded and transported from one ship to another by private companies operating on the island and in surrounding waters.
Not being on the U.S. waiver list does not mean immediate sanctions. A U.S. official said earlier this month that it would take some time for Washington to gather evidence to support punitive measures against banks that have processed oil deals.
The drop in oil imports is a clear indication that traders are beginning to take the message seriously, analysts said.
"If the Singapore government were to advise traders that they want a further reduction, traders would probably want to comply with that because they may not want to compromise other interests they have," said James Dorsey, senior fellow at the Singapore's S. Rajaratnam School of International Studies. ($1 = 1.2768 Singapore dollars)
(Additional reporting by Kevin Lim, and Eveline Danubrata; Editing by Simon Webb and Michael Urquhart) ((Luke.Pachymuthu@thomsonreuters.com)(+65 68703573)(Reuters Messaging: firstname.lastname@example.org))