After Hormuz Blockade... Japan Increases 'Transshipment Imports' of Crude Oil at Sea

Reported by Nihon Keizai Shimbun

Half of Crude Oil Bound for Japan Transferred Mid-Sea

More Time and Cost Involved, but Still Cheaper than U.S. Oil

As tensions continue in the Strait of Hormuz, it has been revealed that Japanese oil refiners are importing Middle Eastern crude oil by receiving cargoes from other countries' tankers in the middle of the ocean.

According to the Nihon Keizai Shimbun (Nikkei) on the 16th, an analysis by European shipping data firm Kpler showed that, out of 68 tankers headed for Japan since March, 33 were estimated to be carrying Middle Eastern crude oil. Of these, 15 were found to have received crude oil transfers from foreign vessels in waters near Malaysia or India.

It is reported that Japanese oil companies are entrusting the transportation of crude oil from the Middle East to a midway point in Asia to foreign tankers such as those from Korea, and then Japanese tankers receive the oil and carry it to Japan. This measure is seen as a way for Japanese vessels to avoid navigating dangerous waters such as the Strait of Hormuz.

In fact, the "Eneos Dream," a tanker affiliated with Japanese oil refiner Eneos Holdings, reportedly received approximately 1.8 million barrels of crude oil from the United Arab Emirates (UAE) from a Korean tanker in the Strait of Malacca late last month. The Korean tanker had departed from Fujairah Port in the UAE and transported the crude oil to Southeast Asian waters.

Nikkei reported that this method is a rare case under Japan's existing crude oil procurement system. Ship-to-ship transfers involve connecting ships by hoses to move crude oil, which typically takes two to three days and incurs additional costs. However, the industry still considers this approach less costly than transporting U.S. crude oil around the Cape of Good Hope in Africa all the way to Japan.

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