Japanese refiners, particularly under the leadership of Shunichi Kito, President of the Petroleum Association of Japan (PAJ), announced that they have managed to secure enough crude oil to meet their needs until the end of November. This news comes as the oil supply situation from the Middle East faces challenges due to recent attacks and the temporary shutdown of the East-West oil pipeline in Saudi Arabia.
Challenges in Oil Supply from the Middle East
The shutdown of the East-West oil pipeline in Saudi Arabia following recent attacks has created new uncertainties regarding the movement of oil shipments from this region. Additionally, Saudi Arabia has halted oil loading at the Red Sea port of Yanbu. However, Saudi officials have managed to increase oil transportation through the Strait of Hormuz and temporarily transfer crude oil outside of chokepoints for loading onto other ships.
Read more: Disruption in Saudi Arabia's East-West Pipeline Affects Global Oil Supply
Shunichi Kito emphasized that oil shipments from Saudi Arabia to Japan have not been completely halted. He added, "In some cases, oil is passing through the Strait of Hormuz at Saudi risk and then being transferred to us outside the Persian Gulf. Therefore, the supply of oil from Saudi Arabia has not been entirely cut off." This is significant as Japan's dependence on crude oil from the Middle East, which passes through the Strait of Hormuz, constitutes over 90 percent of the country's total oil imports.
Diversification of Oil Supply Sources
With the onset of war in the Middle East, Japan has been actively seeking crude oil from alternative sources. According to available information, about 70 percent of oil supply from the Middle East typically reaches Japan via tankers passing through the Strait of Hormuz. Japan has also begun releasing oil from its strategic reserves to cope with the current oil shortage. This action is part of a globally coordinated effort by the International Energy Agency aimed at releasing 400 million barrels of oil and petroleum products.
Japan is now turning to purchase oil shipments from distant countries such as Canada, Azerbaijan, and Africa to compensate for the oil supply shortage that is primarily trapped in the Persian Gulf. However, the economic costs associated with sourcing crude oil from distant locations are putting significant pressure on the country's industrial and economic activities, and the price of oil imports has risen sharply.
Read more: Building Permanent Infrastructure in the Persian Gulf Centered on the Strait of Hormuz · Brent Crude Oil Price Reaches $104.24
