Japan will continue to import Middle East oil; to diversify supply sources: minister
Japan will continue importing crude oil from the Middle East despite escalating tensions in the Strait of Hormuz, but will also make efforts to diversify supply sources, Minister of Economy, Trade and Industry Hiroshige Seko said Tuesday.
The tensions in the Strait of Hormuz intensified after Iran on Friday seized a UK chemical tanker and briefly detained a UK-owned VLCC in one of the world’s most critical chokepoints, ratcheting up regional tensions and risks to oil shipments.
“Crude oil procurements from the Middle East will continue to be important, considering economics of oil price and transport costs,” Seko said at a press conference in Tokyo, where he was asked whether Japan needs to lower its dependency in the wake of escalating tensions in the Strait of Hormuz.
Japanese refiners import bulk of crude oil from the Middle East on VLCCs, but also import crude from other regions typically on smaller Suezmax and Aframax vessels.
Seko, however, added that Japan will continue to try to diversity its crude oil supply sources, which includes efforts to acquire upstream equity assets outside the Middle East.
OIL THROUGH STRAIT OF HORMUZ
Japan’s JXTG Nippon Oil & Energy said Tuesday that for the time being, it will continue to import crude oil, which will transit the Strait of Hormuz.
The largest Japanese refiner has said it is considering crude procurements, which will not transit through the Strait of Hormuz, while keeping its core supply from the Middle East.
Refiners Idemitsu Kosan and Cosmo Oil were also taking safety measures to ship crude oil through the Strait of Hormuz, according to company officials.
Japan’s oil supply security came under the spotlight in the wake of the June 13 oil tanker attacks, when two vessels, including one operated by a Japanese shipping company, were attacked just outside of the Strait of Hormuz, through which around 80% of its crude supply flows.
The Middle East accounted for 88.9% of Japan’s crude imports, or an average 3.13 million b/d over January-May, according to METI data.