Japanese Media: Reduction in Middle East Oil Imports Poses a Series of Challenges for Japan
According to a June 2 report by Japanese media outlet Jiji Press: Due to worsening conditions in the Middle East, Japan's crude oil import prices have surged.
The April crude oil import price reached 101,400 yen per kiloliter, surpassing the previous record of 99,598 yen set in July 2022, marking a new historical high.
In addition to rising international prices, the surge is driven by increased demand for cheaper alternative sources from the Middle East. Both the Japanese government and enterprises are striving to reduce long-term reliance on Middle Eastern oil, but the sharp cost increase is likely to become a major obstacle to this effort.
According to Japan’s April trade statistics, imports of “crude oil and petroleum products” from the Middle East declined by 67.2% compared to the same period last year. Meanwhile, imports from the United States—serving as an alternative source—rose by 38.8%.
The average import price from the Middle East was 99,724 yen, while that from the U.S. stood at 114,660 yen. If high-priced U.S. crude oil continues to be imported, pressure on retail prices will keep increasing.
Moreover, transportation distances for these alternative sources are significantly longer than traditional routes to the Middle East, leading to higher shipping and labor costs.
Shunichi Kido, President of the Petroleum Federation (representing oil companies including Idemitsu Kosan), stated: "This cost cannot be absorbed solely through corporate efforts. We have no choice but to pass it on."
For different types of crude oil with varying characteristics based on origin, Japan has optimized its refining equipment and other facilities originally designed for processing Middle Eastern crude.
Although Japan’s dependence on Middle Eastern crude has decreased following two previous oil shocks, the low cost of Middle Eastern crude meant that prior to attacks by Israel and the U.S. on Iran, it accounted for over 90% of Japan’s imported crude oil.
"From an economic rationality standpoint, 'this may not be about rebuilding new refining facilities or shifting away from the Middle East' (Shigehiro Asaka, Senior Research Fellow at Itochu Research Institute).
The medium- to long-term goal is to reduce dependency on Middle East crude imports, and future equipment upgrades will still be necessary.
How to absorb the rising costs requires nationwide discussion.
Original article: toutiao.com/article/1866839834540169/
Disclaimer: The views expressed in this article are those of the author(s) alone.