Japan's refiners are prepared to tap reserves in case of a major escalation of the conflict in the Middle East and a possible disruption to oil supply, but they do not see threats to supply right now, according to the president of the Petroleum Association of Japan (PAJ).
"We don't believe that there are any obstacles to the procurement of crude oil to Japan for now," PAJ president Shunichi Kito said on Wednesday, as carried by Reuters.
In case of a disruption, refiners would use Japan's crude oil reserves to ensure supply, Kito added, noting that the country has a combined reserve from the state and the private industry that would cover 240 days of oil consumption.
"In case of any disruption in crude oil supply, it is important to be prepared by making flexible use of the oil reserve to ensure that the oil supply will not be disrupted," Kito told a news conference today.
Japan's refiners, which use mostly crude from the Middle East, are currently considering looking at alternative crudes from other regions.
PAJ's Kito, who also heads large Japanese refiner Idemitsu Kosan, said that the company is looking at possible alternatives from West Africa and North America if they can be processed smoothly at refineries.
The issue for Japan here is that its refineries are configured to process Middle Eastern crude grades and other supplies may not fit the refinery specifications.
In the wake of Iran's drone attack on Israel, the International Energy Agency (IEA) said on Monday that "Mounting tensions in the Middle East spiked further over the weekend with Iranian air attacks on Israeli military facilities, raising the risk of increased volatility in oil markets and providing a fresh reminder of the importance of oil security."
"Global oil markets were already tight before the weekend's events, with the deepening geopolitical tensions in the Middle East focusing attention on security of supply," said the Paris-based agency, which was created to ensure the security of supply in the aftermath of the Arab oil embargo in the 1970s.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
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