Japanese US crude oil imports jumped 19 times because the diversification of the push gained speed

Japanese crude oil imports from the US jumped more than 19 times in July because the country’s refiners accelerated efforts to diversify far from severe dependence on the Middle East supply amid increasing geopolitical risks in the region.

Dramatic shift reflects concerns that developed about energy safety after the new tension between Israel and Iran.

Japanese US crude oil imports jumped to 480,000 kiloliters, or 97,390 B/D, in July, representing an increase of 1,820.4% from year to year, according to initial data released August 20 by the Ministry of Finance.

The surge took us the section of crude oil from the total import of Japanese crude oil to 4.2% of the 11,473 million kiloliters imported by the month, marking significant changes in the country’s traditional supply patterns.

Meanwhile, Japan imported 10,685 million kiloliters of crude oil from the Middle East in July, up 6.3% from year to year, contributing 93% of the total country’s crude oil imports, MOF data showed.

In the first half of this year, Japan imported 2,299 million b/d crude oil from the Middle Eastern supplier, contributed more than 95% of the total import of refinery raw materials of 2,415 million b/d, according to the latest data from the Ministry of Economy, Trade and Industry.

Diversification efforts
Increased geopolitical tension and missile exchange between Israel and Iran in June functions as a clear reminder for the industry about the importance of diversification of supply sources to protect energy security against unexpected events, said a trade analyst at a Japanese integrated trading company.

Inventory management sources in Taiyo Oil previously told Platts, part of the S&P Global Commodity Insights, that although the transition to a mixture of new raw materials was difficult, Japan must aim to reduce its dependence on the Middle East raw imports up to around 90%.

A raw material manager in the top of Japan’s top return, Eneeos, emphasized that diversification of crude oil supplies is not only about ensuring immediate availability but also about building security for unexpected geopolitical disorders that can threaten energy security.

In addition, the value of Light Sweet US crude oil has looked very attractive in this new trading cycle, with the WTI Midland premium over the Middle Eastern Sour Class Lower and Medium Eastern Trends, traders and managers of refinery raw materials.

Platts assessed that the spread between WTI Midland and Murban on the North Asian CFR base was minus $ 1.17/B on August 19, down from the highest year-to-date $ 2.51/B on June 4.

Mixture of sakhalin
In July, Japan also recorded Russian crude oil imports for the second month in a row, with customs volumes that seem to reflect the 600,000 barrel cargo balance taken by Taiyo oil in June, was first reported by Platts.

In June, Japan also imported 70,000 kiloliters, or 440,286 barrels, from Russian crude oil, MOF data showed.

Taiyo Oil crude oil intake from Sakhalin Blend marked Japan’s first Russian crude oil import since January 2023, when the country received 747,706 barrels of class, Meti data showed.

Taiyo oil which took Sakhalin Blend crude oil in January 2023, as part of the remaining crude oil volume of the 2022 contract, according to the S&P Global Commodities at SEA (opened in the new tab).

Sakhalin Blend is a light and sweet crude oil produced as a side product of LNG production in the Sakhalin project 2. Class exports to Japan are freed from the “price limit” of Russian G7 oil due to an important role in ensuring stable LNG production of the project.

Sakhalin Energy is owned by the majority by Russia’s state -owned Gazprom, with a minority bet held by Mitsui & Co. Japan and Mitsubishi Corp.
Source: Platts