Japan Sees Increase in Oil Imports Forecast for May Following April Downturn

Japan's Crude Oil Imports Expected to Rebound in May

Japan's crude oil imports are anticipated to increase to approximately 1.7 million barrels a day in May, approximately three-quarters of the level seen a year earlier. This estimate is based on Bloomberg's vessel-tracking data as of May 19 and exceeds the government's forecast. The expected rebound is primarily driven by independently arranged crude supplies from the US and Saudi Arabia via the Red Sea. However, some cargoes bound for Japan may still be rerouted.

The Japanese government had initially projected as of May 12 that alternative crude procurement from the Middle East outside the Strait of Hormuz and from the US would total around 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 were set to arrive this month. In the event of a shortfall, the government had planned to draw on reserves to make up the difference.

Japan heavily relies on the Middle East for over 90% of its crude oil supply. In the wake of the effective closure of the Strait of Hormuz, the government and private firms have been working to secure alternative sources. To stabilize the market, the country has conducted two releases of reserves, leaving stockpiles at 202 days' worth, compared to 243 days at the end of February.

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If Japan can effectively utilize alternative routes and expand procurement from other regions to limit further draw-down of its reserves, it would strengthen the country's ability to withstand prolonged disruption in Middle Eastern supplies.