Japan’s refiners are increasing crude oil imports from Nigeria as they grapple with a significant reduction in Middle Eastern supplies due to the ongoing conflict involving Iran. This shift underscores the short-term difficulties in replacing the bulk of their usual crude sources.
According to data from the Petroleum Association of Japan, refinery runs in the week ending April 11 stood at 67.8% of designed capacityā€”slightly above the previous week’s 67.7% but well below the more than 80% levels recorded before the war escalated in late February. The outlook for May may improve, as Japan has released oil from its national stockpile and secured substitutes for over half the volume it imported via the Strait of Hormuz last May. However, Middle Eastern crude typically accounts for 95% of Japan’s total imports, making a full transition challenging.
Japanese refineries are optimised for medium-sour Middle Eastern crude, limiting their flexibility to process alternative grades. In addition to Nigeria, suppliers such as Malaysia, Azerbaijan, Brazil, and Angola are expected to benefit from increased exports to Japan.
“Japan could likely push non-Middle East crude to around 30-50% of its slate in the short term, but fully replacing Middle Eastern supply is difficult,” said Nithin Prakash, an analyst with Rystad Energy. Refiners can blend Middle Eastern crude with light-sweet grades from the US and West Africa, as well as medium grades from the Caspian region and parts of Latin America. This adjustment is likely to increase yields of gasoline and naphtha while reducing diesel and jet fuel output.
The Petroleum Association of Japan has suspended publication of petroleum product stock data, citing the changing supply structure. As Japan navigates this transition, Nigeria and other suppliers stand to gain from the temporary rebalancing of global crude flows.
