Japan may reduce oil imports from Iran.

A Japanese newspaper reported that Japan may be on its way to decreasing its Iranian oil imports by 20 percent.

The Japanese business daily Nikkei reported on Thursday that Japan is trying to sign an agreement with the United States that would protect Japanese banks now threatened with punitive U.S. sanctions because of their dealings with Iran.

Japan, which is the world's third biggest oil consumer, relied on Iran for nine percent of its crude demand last year. The damage to Japan's nuclear facilities has made the country more reliant on oil imports.

Nikkei reports that by the end of February, Japan will sign an agreement with the U.S. laying out the steps Japan will take to decrease its dependence on Iranian oil.

Japanese government spokesman Osama Fujimora also indicated that Japan will soon sign an agreement with the U.S. but he refused to provide any concrete information about reductions in oil imports from Iran.

China, India and Japan are currently the main buyers of Iranian crude, accounting for 50 percent of Iran's oil exports.

Reports indicate that South Korea is also trying to find ways to avoid U.S. sanctions, announcing today that it is negotiating with the U.S. to find ways of reducing their Iranian oil imports.

The European Union has already imposed an oil embargo on Iran, and as of July 2012, EU member states will no longer import Iranian oil.

The Western sanctions were triggered by the last report from the International Atomic Energy Agency, which indicated that Iran's nuclear program may have a military component.