Japan’s crude imports have been on a decline from 2022 to 2024. This was due to a confluence of factors – falling domestic demand for transportation fuels due to an ageing and shrinking population, and the shift towards lower-carbon fuels. Utilizing Vortexa’s vast historical data, crude arrivals into Japan in 2024 were at the lower end of the 9-year seasonal range from 2016-2024, underscoring the long-term decline.

We expect continued downward pressure in Japan’s crude imports for the rest of this year. Preliminary flow data indicates that crude arrivals into Japan are lower y-o-y in April. There are no known permanent refinery closures in Japan in March-April this year, hence the lower crude imports in April are most likely due to the fall in domestic demand. The last planned closure was by Japan’s second-biggest oil refiner, Idemitsu Kosan, who permanently shut its 120 kbd Yamaguchi refinery in March 2024. The company plans to turn the site into a hub of carbon-free energy such as solar power and hydrogen by the 2030s.

Macroeconomic factors will lower Japan’s crude imports

Japan’s crude imports typically fall in the second quarter as refineries lower crude throughput. Apart from seasonal factors, Japan’s export-oriented economy is likely to face pressure from the slowdown in global trade. This is due to 10% base tariffs imposed by the United States on imports from Japan, and potential economic slowdown in China, a major trading partner for Japan. Demand for diesel will fall when industrial activities weaken and so will demand for marine gasoil and fuel oil should shipping activities weaken. This will pressure domestic refining margins and crude throughput. As such, crude arrivals into Japan are likely to see further downside for the rest of the year compared to 2024 figures.

Japan mainly imports crude from the Middle East as the refining system is configured to run sour crude. The country’s reliance on crude from Saudi Arabia and the United Arab Emirates (UAE) has increased over the years while overall crude arrivals fell. As shown from the chart below, declining imports of crude into Japan from 2022 were due to lower arrivals from Russia, Kuwait, Qatar and other countries. Meanwhile, imports of crude from Saudi Arabia and the UAE fell by a smaller extent during the same period, despite higher output cuts from these countries in H2 2023 and 2024 compared to other OPEC+ members.

This likely implies that Japanese refiners have a higher proportion of longer term contracts with Saudi Arabia and the UAE, compared to other suppliers. While this ensures stability of crude supplies for Japan – which is almost fully dependent on imports – this reduces diversification in the country’s import basket. Saudi Arabia and the UAE are part of the OPEC+ group that have planned to hike oil output in April and May this year. With Japan’s crude imports set to decline further in the months ahead, we may see an even higher percentage of arrivals from Saudi Arabia and the UAE.

Product net-imports are trending higher, exposing limited refining competitiveness

In clear difference to crude oil, net-imports of clean petroleum products (CPP) are generally trending higher over time, with March 2025 marking the second highest level on record. The reason for this development is limited competitiveness of Japan’s refining sector instead of strong domestic demand. New regional refining capacity, together with growing product inflows into Asian markets from the Wider Arabian Sea (India West Coast and Middle East), make it difficult for Japanese refiners to export their own products into regional markets. Therefore, it is declining exports which is driving Japanese net-product imports higher. Given challenging refining margins, this trend is unlikely to reverse anytime soon, providing another reason for lacklustre crude imports in the coming months.