Japan's refiners secured sufficient crude supplies through November, industry body says

• Saudi crude shipments continue via ship-to-ship transfers outside the Strait of Hormuz, with some oil passing through at Saudi Arabia's risk before transfer to Japanese buyers
• Refiners are meeting demand through November using stockpiles from previous national oil reserve releases, without requiring additional releases at this time
• The PAJ President cannot rule out future national reserve releases, as the situation remains unpredictable with suspended loadings at Saudi Arabia's Yanbu Red Sea hub and cancelled European deliveries

Summary

Key Development:

Japanese oil refiners have secured adequate crude supplies through November despite escalating Middle East tensions following attacks on Saudi Arabian oil infrastructure, according to the Petroleum Association of Japan (PAJ).

Critical Details:

• Saudi Arabia's East-West pipeline was damaged in an attack last week, prompting suspension of crude loadings at the Red Sea export hub of Yanbu
• Riyadh cancelled some deliveries to Europe following the incident
• Oil prices climbed to near four-month highs earlier this week on supply concerns
• The conflict involves Saudi Arabia and Yemen's Houthi forces, raising fears of broader regional instability

Supply Continuity Measures:

PAJ President Shunichi Kito confirmed that Saudi crude shipments continue through ship-to-ship transfers outside the Strait of Hormuz, with some oil passing through the strait at Saudi Arabia's risk before transfer. Japanese refiners are also drawing on stockpiles from previous national oil reserve releases to maintain supply security.

Companies Mentioned:

Idemitsu Kosan, Japan's second-largest refiner, whose chairman Kito heads the industry association.

Market Implications:

While immediate supply concerns are addressed through November, uncertainty remains. Kito acknowledged the situation's unpredictability and could not rule out additional releases from Japan's national reserves if conditions deteriorate. The vulnerability of Middle Eastern supply routes continues to support elevated oil prices.

Forward Outlook:

Supply security beyond November remains uncertain, contingent on the evolution of regional tensions and Saudi Arabia's ability to maintain alternative shipping arrangements.