Japan's petroleum supplies are expected to remain adequate through March 2028 despite the US-Iran war, due to the procurement of alternative supplies and the use of its strategic reserves, Japanese Prime Minister Sanae Takaichi said during a ministerial meeting on Thursday.
This is about a year longer than the previous estimate, according to Takaichi, and based on a conservative assumption that only 75% of the previous year's barrels will be met by volumes procured from alternative suppliers beginning in August.
She also emphasized that the government will not release petroleum reserves this month, "as procurement volumes are expected to exceed the amount of crude oil required in July."
Alternative supplies from the US are projected to increase ten times year over year, according to the prime minister.
For June, about 80% of the required alternative volume has been secured, she added.
"...diversification of procurement sources has progressed," Takaichi said, with petroleum supplies purchased from several regions, including the US, Latin America, Asia-Pacific, Central Asia, and Africa. Japan will receive its first crude oil from Mexico in July.
About 90% of Japan's crude oil imports were previously sourced from the Gulf and shipped through the Strait of Hormuz.
As for naphtha, the prime minister noted that prices have recently declined to slightly above $700 per ton, after prices doubled to more than $1,000/ton following the conflict in the Middle East.
"Petroleum products, including petrochemical products derived from naphtha, can continue to be supplied beyond the current fiscal year," Takaichi said, adding that "a mechanism has been launched to enable supplies of products such as toluene and xylene at volumes equivalent to 1.8 times normal demand."
Paint and thinner manufacturers have welcomed the move, which will increase production as early as June 18.
On Wednesday, a new scheme to allow direct sales by major lubricant manufacturers to all industries was launched, according to Takaichi.
The government will also work to improve the distribution of petroleum products and support downstream businesses.