RIYADH: Saudi Arabia’s crude oil supplies to Japan rose to a 10-year high in 2016, underlining the kingdom’s strong will to defend its share in the ever competitive Asian markets. Saudi Arabia’s crude supplies to Japan last year averaged 1.18 million b/d, up 4.7% year on year, and accounted for roughly 36% of Japan’s total imports of 3.31 million b/d, according to S&P Global Platts calculations based on Ministry of Economy, Trade and Industry data.
Saudi Arabia’s market share in Japan rose from 33% in 2015, marking the third consecutive year-on-year rise. “We appreciate that [Saudi Arabia] maintained simple but logical pricing [for crude supplies],” a source with a Japanese refiner said, adding that price was the decisive factor in his company’s decision to buy Saudi crudes. Saudi Arabia’s market share strategy has worked effectively in Japan as a consequence of its pricing, which were often competitive against similar grades from the Middle East, market sources said. The rise in Saudi crude oil supplies came even as Japan’s total crude imports in 2016 fell to their lowest since 3.19 million b/d imported in 1987.
Japan’s 2016 imports fell 2% year on year. Japanese crude imports from Saudi Arabia rose in 2016 on the back of the kingdom’s response to incremental demand for its oil, coupled with spot supplies from state-owned Saudi Aramco’s leased storage in Okinawa, despite no increase in term import contractual volumes, market sources said. The boost in Saudi oil market share in Japan is good news for the Middle East supplier, which recently lost its position as China’s top oil supplier to Russia. In contrast, Japan’s crude imports from Russia in 2016 dropped 30.6% year on year to 198,473 b/d. The declining crude exports to China are “making the Saudis very nervous,” Fareed Mohamedi, chief economist of energy consultancy Rapidan Group, said in December at an energy seminar of the Institute of Energy Economics, Japan (IEEJ).
