Japan’s refinery utilization rates are rebounding in May as releases from petroleum reserves and increased supply of non-Middle East crude are easing the crude supply crunch seen in March and most of April.<\/p>\n
For the first time since March, refiners in Japan have boosted their average utilization rate to above 70% in the past two weeks, data from the Petroleum Association of Japan (PAJ) showed<\/a> on Wednesday.<\/p>\n Utilization rate of the designed capacity was 73.3% in the week to May 9, following 77.3% utilization rate the week prior to May 2, the data showed.<\/p>\n These run rates compare to utilization rates in the 60% range<\/a> in April, according to the weekly statistics data released by the PAJ.<\/p>\n Resource-poor Japan is one of the biggest energy importers globally and relied on the Middle East for as much as 95% of its oil imports before the war. Most of the oil comes from Saudi Arabia, Kuwait, the United Arab Emirates, and Qatar. Of these Middle Eastern supplies, about 70% typically arrived in Japan on tankers traveling through the Strait of Hormuz.<\/p>\n As the war choked supply from the Middle East, Japan began releasing oil stocks<\/a> from national reserves at the end of March, as part of the IEA-coordinated record-high release of 400 million barrels of oil and fuel. Japan is releasing a total of 80 million barrels of oil stocks, including 54 million barrels of crude and 26 million barrels of oil products as part of the IEA’s 400-million-barrel release.<\/p>\n The ongoing stocks release, which is Japan’s biggest, is helping refiners increase throughput. So is alternative supply from producers outside the Middle East, including rare cargoes from Azerbaijan<\/a> and Latin America.<\/p>\n Some of the largest refiners in Japan, including Cosmo Energy Holdings and Idemitsu Kosan, aim for average utilization rates of more than 90% in the current fiscal year ending March 2027.<\/p>\n Cosmo Energy’s outlook for the fiscal year include assumptions that crude oil production in the Middle East would normalize in August, and crude procurement “from September onward.”<\/p>\n By Tsvetana Paraskova for Oilprice.com<\/a>\u00a0<\/p>\n