By Stanley White and Tetsushi Kajimoto
TOKYO (Reuters) - Japan pledged on Thursday to take concrete action to cut Iranian oil imports in response to an appeal for support from visiting U.S. Treasury Secretary Timothy Geithner, as Washington steps up efforts to sanction Tehran over its disputed nuclear program.
Geithner welcomed Tokyo's cooperation, an encouraging sign for U.S. foreign policy after China rebuffed U.S. sanctions aimed at starving Iran of the oil revenues that provide the country of 74 million people with vital economic support.
Iran faces the prospects of cutbacks in oil sales to its top buyers including China and Japan. The European Union, a major buyer, has committed to banning imports of Iranian oil.
Japan's Finance Minister Jun Azumi said Iranian crude makes up 10 percent of Japan's overall oil imports.
"We would like to take action concretely to further reduce (that) in a planned manner," he said after meeting Geithner.
"On the other hand, we need some time in non-crude oil related areas, so I asked the Secretary to take Japan's situation into consideration."
The Obama administration will be consulting with its various allies on the most effective way to enforce the sanctions, including significantly reducing Iranian crude imports, a U.S. official said.
Cutting Iranian crude imports would not be without risks for Japan. It relies on imports for its energy needs and has to import more fuel to make up for waning use of nuclear power following last year's nuclear power plant disaster in Fukushima.
"It would cause immense damage if they were cut to zero," Azumi said in a news conference, referring to Japan's Iranian oil imports.
Anxiety over Iran's nuclear program, which it says is not for military use, could also push up oil prices and harm the global economy.
Indeed, Japan's Prime Minister Yoshihiko Noda voiced concern to Geithner about the potential impact of the U.S. sanctions on Japan and the world economy.
Japanese Chief Cabinet Secretary Osamu Fujimura, the government's top spokesman, later tried to soften Azumi's pledge to reduce Iranian oil imports, saying it was one of many options under consideration.
President Barack Obama authorized 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.
Japan's government hopes to secure a waiver from the sanctions for Japanese banks by reducing Iranian crude imports, something it has started discussing this with the domestic oil industry, the Yomiuri newspaper reported.
However, sources at two major Japanese oil refiners using Iranian crude said they had not been approached by the government.
Azumi didn't elaborate on what he meant by "non-crude oil related areas," but one potential issue is its repeated intervention to weaken the yen to boost exports.
Azumi said he had meaningful discussions on currencies with Geithner, but declined to reveal the details. Geithner also declined to comment on Japan's intervention.
CUTTING OFF IRAN'S CENTRAL BANK
Geithner traveled to China and Japan this week to discuss the global economy and seek cooperation on stricter sanctions on Iran, an OPEC member and the world's fifth-largest crude exporter.
U.S. Deputy Secretary of Treasury Neal Wolin has visited Thailand and the Philippines to explain the new U.S. sanctions, emphasizing that countries can avoid them if they significantly reduce their oil imports from Iran.
Next week, Daniel Glaser, Treasury's assistant secretary for terrorist financing, and his counterpart at the State Department will be traveling to Japan and South Korea to discuss the best way to implement the sanctions, the U.S. official said.
Iran denies Western suspicions that its nuclear program has military goals, saying it is for purely peaceful purposes.
Washington has rejected Iran's assertion and has pressed ahead with new sanctions.
The latest law would freeze financial institutions that deal with Iran's central bank out of U.S. markets. 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.
"We are exploring ways to cut Iran's central bank off from the global financial system. We are in the early stages of consulting with Japan and our other allies," Geithner said.
"We appreciate the support that Japan has provided."
Japan asked the United States to waive its banks in return for cutting Iranian oil imports, but Japan must decide how it will lower imports and then it is up to the U.S. government to debate whether a waiver will be granted, a Japanese finance ministry official told reporters.
Japan will present Washington with a "menu" of possible options in exchange for a waiver by the end of February, a government source told Reuters last week.
The tightening noose of U.S. sanctions has set off an Asian round of diplomacy with Middle East oil producers. Japan's Foreign Minister Koichiro Gemba asked OPEC kingpin Saudi Arabia and fellow cartel exporter, the United Arab Emirates, to supply the Asian buyer with more oil.
China's Premier Wen Jiabao will visit Saudi Arabia, the UAE and Qatar in a trip beginning this weekend. The prime minister of South Korea, another major buyer of Iranian crude, is due to visit the UAE and Oman from Friday.
China gave no hint on Wednesday of giving ground to U.S. demands to curb Iran's oil revenues, rejecting Washington's sanctions on Tehran as overstepping. Iran is China's third-largest crude supplier.
U.S. officials sounded more optimistic, saying they will focus more on China's actions than on its public statements.
However, China has reduced crude purchases from Iran for January and February in a dispute over contract-pricing terms.
India faces pressure to cut crude purchases from Iran, but policy and industry officials have sent mixed messages on future plans with one unnamed cabinet minister on Thursday saying the country would continue to do business with Tehran.
The European Union is more sympathetic to U.S. pressure on Iran. EU foreign ministers are expected to agree on a ban on imports of Iranian crude oil on January 23.
(Additional reporting by Osamu Tsukimori and Lucy Hornby and Rachelle Younglai in Washington; Editing by Tomasz Janowski, Ed Lane, Neil Fullick and Jan Paschal)