Japan pushes alternative routes to bypass Hormuz…securing crude through early next year

Source

Korea Economic Daily

Summary

The Japanese government said it will increase secured crude volumes through alternative routes and releases from oil reserves amid supply disruptions caused by the closure of the Strait of Hormuz.
It said that procurement from the UAE, Saudi Arabia, Texas in the United States, and Azerbaijan, along with an additional release of 20 days’ worth of state reserves, would enable Japan in May to secure crude at about 60% of the level in the same period last year.
The government expects that procurement via alternative routes and reserve releases will secure the volumes needed through early next year, noting it has about eight months’ worth of oil stockpiles and that the “amount needed for all of Japan” has been secured.

Forecast Trend Report by Period

Use of alternative routes via the UAE and Saudi Arabia

In May, to secure 60% of last year’s crude volume

Considering additional release of 20 days’ worth of strategic reserves

Mitsui O.S.K. Lines vessel transits the strait again

With the de facto closure of the Strait of Hormuz prolonging disruptions to crude supply, the Japanese government has decided to increase secured crude volumes by using alternative routes and other measures. Meanwhile, a vessel operated by Japanese shipping company Mitsui O.S.K. Lines has exited the Strait of Hormuz for the second time.

According to NHK on the 5th, the Japanese government estimates that through procurement via alternative routes and the release of oil reserves, it will be able to secure crude volumes in May equivalent to 60% of the level in the same period last year. This would be a significant increase compared with expectations that this month’s secured crude volume will be 20% of the level in the same period last year.

Alternative routes under consideration include departing from the Port of Fujairah near the eastern exit of the Strait of Hormuz in the United Arab Emirates (UAE), or leaving from Yanbu on Saudi Arabia’s western coast and transiting the Red Sea. Via these routes, Japan is expected to receive roughly half of the volume it procured from the UAE and Saudi Arabia in the same period last year. In addition, crude procurement from Texas in the United States is expected to reach four times last year’s level. Japan is also expected to receive crude from Azerbaijan.

Any shortfall even after procurement via alternative routes will be covered by releasing reserves. The Japanese government is reportedly considering an additional release in May of about 20 days’ worth of state reserves. Japan last month released 15 days’ worth of private reserves and one month’s worth of state reserves.

NHK reported that the Japanese government expects that procurement via alternative routes and reserve releases will allow it to secure the volumes needed through early next year. Prime Minister Sanae Takaichi wrote on X on the 4th, “Japan has about eight months’ worth of oil stockpiles, and alternative procurement is also steadily progressing,” adding that “the amount needed for all of Japan” has been secured.

Meanwhile, Mitsui O.S.K. Lines said on the 4th that the oil tanker “Green Sanbi,” owned by its Indian affiliate, has exited the Strait of Hormuz and is sailing toward India. On the 3rd, a Panama-flagged liquefied natural gas (LNG) carrier operated by Mitsui O.S.K. Lines became the first Japan-related vessel to exit the Strait of Hormuz since the outbreak of war between the United States and Iran. This reduced the number of Japan-related vessels stranded in the Persian Gulf due to the war from 45 to 43.

Reporter Kim Il-gyu black0419@hankyung.com