In a move responding to strong American criticism, the Japanese government is cautioning companies to hold back on signing new contracts for Iranian oil despite the sudden decrease in the prices being offered by Iran.
Government sources confirmed today one group of Japanese companies had been offered oil at prices $4 to $5 a barrel lower than Iran was asking just a week or 10 days ago.
The Ministry of Trade and Industry today cautioned the companies to to prudent about any long-term oil purchases because of the possible effect on Japan's relations with the United States and other countries during the hostage crisis in Iran.
Other sources said Japan has decided to hold up further Iranian contracts, partly out of consideration for the United States and partly because of confusion over prices in the wake of the indecisive OPEC meeting last week in Caracas.
The government's advice to the companies, as well as recent official statements deploring the U.S. Embassy seizure, have cost it some popularity in Tehran, where, according to news reports, it has been attacked on the radio and in the press.
The recent burst on media Criticism has alarmed the small Japanese community there, and Ambassador Tsutomu Wada yesterday asked the Iranian Foreign Ministry for assurances of safety for about 1,000 Japanese nationals living in Iran.
The responses to events in Iran are part of Japan's stiffening attitude toward Tehran since the Tokyo government was strongly criticized in early December for buying Iranian oil at high prices while the United States tried to keep pressure on that country to free the hostages.
Japan had been treading a narrow line, hoping to maintain friendly relations with the United States, an ally and major trading partner, while not alienating Iran, which supplies about 12 percent of Japan's oil.
Since the uproar over oil purchases, Japanese companies have been instructed to desist from buying highpriced oil on the spot market and the government has obliged the United States by taking a much tougher line in denouncing the seizure in Tehran.
American officials, once dissatisfied with Japan's bland statements on the hostage issue, now consider that the government here is being supportive both in regard to oil purchases as well as the embassy seizure.
The continuing tug of war for Japan's loyalties is believed in some quarters to lie behind the sudden reduction of prices offered by the National Iranian Oil Co.
Thirteen Japanese companies, divided into small groups, have been negotiating in Tehran for next year's supplies. Earlier this month, several of them were offered contracts at $35 a barrel. But in recent days one group of large trading companies was asked to pay only about an average of $30 a barrel.
Part of that sum is said to be a premium above the standard price of $28.50. In past negotiations with Japanese firms, the Iranian oil company has insisted that for the privilege of buying standard-price oil on long-term contracts, the companies should buy other oil at higher prices. It was when several firms agreed in late November to pay "spot" prices of nearly $44 a barrel that criticism from the United States became intense.
Different sources read the Iranian motive different ways. Some feel the lower price was an inducement to win Japan's sympathies as Washington presses for economic sanctions against Iran in the United Nations. Others think Iran is merely having unexpected trouble selling oil in the face of the American embargo. One government source noted today that the same lower prices are being offered to at least two European companies in addition to Japanese firms.
Japan has been negotiating since early fall for a 30 percent increase next year in the amount of oil it buys from Iran. Iran initially indicated it would go along with that amount but the pressures raised by the hostage seizure caused several suspensions in the talks.
The companies' negotiators are now in Japan for consultations, and several of their officials were summoned to a meeting this morning by the powerful Ministry of Trade and Industry. They were advised to take a prudent attitude toward the new contract offers out of consideration for opinion in other countries, particularly the United States. On most -- but not all -- occasions of that type, corporations heed the ministry's advice.
Other sources in the government said the word has been passed to let the issue of new Iranian contracts slide for a period of time, possibly until the hostage issue is resolved.
Japan has publicly promised not to raise its oil purchases from Iran above the level prevailing before the hostages were seized. The promise went far toward pacifying American feelings.
One government official said today Japan could seek the 30 percent increase for next year and still comply with that self-imposed restriction. The reason is that a large portion of the Iranian oil imported before the hostage seizure reached here through major American oil companies which have now canceled sales to Japan. A 30 percent increase in direct purchases by Japan in the coming year would just about make up for the volume formerly delivered by the American companies.