The United States exempted Japan and 10 EU nations from financial sanctions because they have significantly cut purchases of Iranian crude oil, but left Iran's top customers China and India exposed to the possibility of such steps. 

The decision is a victory for the 11 countries, whose banks have been given a six-month reprieve from the threat of being cut off from the US financial system under new sanctions designed to pressure Iran over its nuclear program.

The list did not, however, include China and India, Iran's top two crude oil importers, nor US allies South Korea and Turkey, which are among the top-10 consumers of Iranian oil.

Japanese Finance Minister Jun Azumi welcomed the decision and said Japan would continue to cut its imports of Iranian oil at a set rate in the future.

'The decision takes account of Japan's steps on Iranian oil, including its future response,' he told reporters at a regular briefing.

A US official held up Japan's estimated 15-22 percent cut in oil purchases from Iran in the second half of last year as an example for other nations, saying it did so after the 'tragedy' of the earthquake that caused the Fukushima nuclear disaster.

'Japan was a model,' Carlos Pascual, State Department Special Envoy and Coordinator for International Energy Affairs, told lawmakers. 'If Japan was able to do what it did ... that should be an example to others that they could potentially do more.'     

Pascual declined to set a benchmark for countries to secure an exemption from the US financial sanctions, noting US law only says they must 'significantly reduce' oil imports from Iran and must continue to do so to win future exemptions.

South Korea will hold another round of talks soon with the United States on significantly reducing its imports from Iran, a source at the Korea's economy ministry said on Wednesday.
 

South Korea, the world's fifth-largest oil importer, increased its imports from Iran in 2011 by 20 percent. Its refiners have also signed deals to import a little more crude from Iran in 2012.

The 10 nations from the European Union, which has already decided to stop importing Iranian oil from July, were Belgium, Britain, the Czech Republic, France, Germany, Greece, Italy, the Netherlands, Poland and Spain, the State Department said.

'The actions taken by these countries were not easy,' US Secretary of State Hillary Clinton said in a statement. 'We commend these countries for their actions and urge other nations that import oil from Iran to follow their example.'  

While China and India and others remain exposed to the possible financial sanctions if they do not significantly cut Iranian imports, US law gives President Barack Obama the ability to waive such steps if this is in the national interest. - Reuters