(May 26): Japan’s May crude oil imports are expected to rebound to around 1.7 million barrels a day, roughly three-quarters of the level a year earlier, as refiners step up alternative procurement while the Strait of Hormuz remains largely closed.
The estimate, based on Bloomberg’s vessel-tracking data as of May 19, is likely to exceed the government’s outlook, supported mainly by independently arranged crude supplies from the US and from Saudi Arabia via the Red Sea. Some cargoes bound for Japan may still be rerouted.
The Japanese government had projected as of May 12 that alternative crude procurement from the Middle East outside the Strait of Hormuz and from the US would total about 1.4 million barrels a day in May. An additional 70,000 barrels a day was expected from cargoes that transited the strait on April 29 and are set to arrive this month. The government had planned to draw on reserves to make up the shortfall.
Japan relies on the Middle East for over 90% of its crude oil supply, and in the wake of the effective closure of the Strait of Hormuz, the government and private firms have been working to secure alternative sources.
The country has conducted two releases of reserves to stabilise the market, leaving stockpiles at 202 days’ worth, compared with 243 days at the end of February.
If Japan can limit further draw-down of those reserves by using alternative routes and expanding procurement from other regions, it would strengthen the country’s ability to withstand prolonged disruption in Middle Eastern supplies.
See also: Oil spikes as renewed Gulf attacks threaten fragile ceasefire
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