News On Japan

Japan Cuts Refinery Runs as It Races to Replace Middle East Crude

TOKYO - Japan has reduced refinery operating rates as it scrambles to secure alternative crude supplies following disruptions to shipments through the Strait of Hormuz, underscoring the growing strain on one of Asia’s most import-dependent energy markets.

Japanese refiners were operating at 67.8% of capacity in April, according to Reuters data, indicating processors are slowing output while awaiting replacement cargoes from the United States and other suppliers outside the Middle East.

The cutback suggests Japan’s actual crude requirement for May may be lower than initial estimates based on normal import volumes, easing short-term pressure on emergency procurement efforts.

Japan typically imports about 2.8 million barrels of crude oil per day, with a large share historically linked to routes passing through Hormuz. Based on normal flows, more than 60 million barrels of May supply could have been exposed to disruption.

The government has said about 60% of the crude required for May has already been secured through alternative sources and routes that do not rely on the strategic waterway.

Japan this week received its first substitute shipment of U.S. crude since the Middle East situation deteriorated. The cargo, carried by the tanker Otis, departed Texas in March and was delivered to Chiba for processing.

Based on the vessel’s size and configuration, the Otis appears to be an Aframax-class tanker, a medium-sized crude carrier typically capable of transporting roughly 500,000 to 800,000 barrels. Aframax vessels are commonly used on flexible long-haul routes because they can access more ports and transit waterways such as the Panama Canal more easily than larger supertankers.

Imports from the United States in May are expected to be about four times higher than a year earlier as refiners diversify purchases and seek to stabilize domestic fuel supply.

The combination of lower refinery runs, stockpile management and increased imports reflects Japan’s effort to cushion the impact of one of the most serious threats to regional oil trade in recent years.

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