Japanese refiners have procured enough crude oil to last them through November, the head of the Petroleum Association of Japan (PAJ) said on Friday, amid yet another twist in supply availability from the Middle East.
The temporary shutdown of the East-West oil pipeline in Saudi Arabia following attacks last week added another uncertainty in oil cargo movements from the Middle East region after the Kingdom halted loadings at the Red Sea port of Yanbu.
The Saudis, however, have boosted shuttle-shipping through the Strait of Hormuz with crude oil shipped by Saudi Arabia to just outside the chokepoint for loading on other vessels by the buyer.
Shipments from Saudi Arabia to Japan have not entirely stopped, PAJ’s president Shunichi Kito said on Friday, as carried by Reuters.
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“In some cases, oil passes through the Strait of Hormuz at Saudi Arabia’s risk before being transferred to us outside the Gulf. For that reason, supplies from Saudi Arabia have not ceased entirely,” the executive said.
Since the war in the Middle East began, Japan has scrambled to secure crude oil supply from alternative sources as its dependence on crude from the Middle East passing through the Strait of Hormuz was more than 90% of all crude imports. Of the Middle Eastern supplies, about 70% typically arrived in Japan on tankers traveling through the Strait of Hormuz.
The G-7 economy has also moved to release crude from its strategic reserves as part of an IEA-coordinated global effort to release 400 million barrels of crude and oil products.
Japan is now buying cargoes from as far as Canada, Azerbaijan, and Africa to offset the supply that continues to be mostly trapped in the Persian Gulf.
However, the economic cost of sourcing crude oil supply from faraway places to offset the major loss of deliveries from the Strait of Hormuz is high, with soaring oil import bills weighing on the industrial and economic activity.
By Michael Kern for Oilprice.com
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