Japan’s Oil Import Bill Soars 59% as Trade Deficit Deepens
Japan’s oil import bill surged by 58.7% on the year last month, with volumes rising by a much more modest 3.6%. This pushed the country’s total import bill 28% higher and extended its trade deficit for the fourth month in a row.
“Oil import costs could increase further from September onward, leading to a further deterioration in Japan's terms of trade, given the roughly two-month lag before higher crude prices are reflected in imports arriving at Japanese ports,” Daiwa Institute of Research analyst Koki Akimoto said, as quoted by Reuters.
Oil import costs for Japan will inevitably increase further this month as oil prices climb on the latest escalation in the Persian Gulf and the extension of the fighting to the Red Sea, with Yemen’s Houthis stepping up their attacks against Saudi energy infrastructure.
For August, Japan booked a trade deficit of $7.12 billion. This was slightly higher than what analysts had predicted and the highest on record. With regard to the country’s total import bill for August, forecasters had seen it rising 26.3% in August from a year earlier.
Total imports for August broke the previous record set in July, when the country’s oil import bill jumped by as much as 87.8%, breaking the previous month’s record. Japan is heavily dependent on energy imports, with as much as 90% of its crude oil coming from the Middle East before the U.S.-Israel war with Iran began at the end of February.
Since then, Japan has moved to diversify urgently, buying crude from Nigeria, Angola, South Sudan, Azerbaijan, the United States, and Canada. The country has also made a series of releases from oil inventories to ensure adequate supply. The diversification, along with the rising war premium on oil prices, has caused the swelling in its energy import bill, with little chance of relief on the horizon.
By Irina Slav for Oilprice.com
Japanese Refiners Rush for Oman Crude After Saudi Pipeline Shutdown
Some refiners in Japan this week rushed to buy Oman’s crude for earlier loadings after Saudi Arabia shut down its key pipeline bypassing the Strait of Hormuz, traders with knowledge of the purchases told Bloomberg on Wednesday.
Late last week, Saudi Arabia was forced to temporarily shut down the East-West oil pipeline following drone attacks launched from the territory of Iraq close to the Iranian border on Thursday. The shutdown of the pipeline is a precautionary measure, after the attacks resulted in a number of injuries, the world’s top crude oil exporter said.
The 750-mile-long East-West pipeline became Saudi Arabia’s vital oil route to bypass the Strait of Hormuz after the Middle East conflict started and Hormuz was closed to shipping traffic. Thanks to the East-West pipeline, the Kingdom has managed to re-route most of its crude loadings from the western ports in the Persian Gulf to the Red Sea port of Yanbu.
Apart from announcing the shutdown of the pipeline and condemning the attacks, Saudi Arabia has not officially updated the market either on the extent of the damage or the timelines for repairs.
The repairs could take three to five weeks, two regional officials briefed on the matter told The Associated Press.
U.S. Energy Secretary Chris Wright insisted on Tuesday that the pipeline could be back into service within days.
Asian refiners are not sure yet how the shutdown of the pipeline would affect oil loadings at the port of Yanbu.
At least four Asian refiners haven’t received any clarification from Saudi Arabia yet, traders involved in the communication told Bloomberg on Monday. Two of these refiners expect to pick up their cargoes at Yanbu as scheduled if there is no communication about delays in the coming hours and days, according to Bloomberg’s trade sources, who wished to remain anonymous.
By Tsvetana Paraskova for Oilprice.com
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