Middle East crisis deepens Japan’s bunker supply crunch

Bunker fuel supply in Japan has tightened significantly due to ongoing tensions in the Middle East.

IMAGE: Mountain Fuji and the Keihin Industrial Zone near the Tokyo-Yokohama area, Japan. Getty Images

As of 16 March, the government has started releasing crude from both strategic reserves and private inventories, equivalent to about 15 days of supply, to stabilise the market. However, this will not provide immediate relief, as the crude still needs to be refined before it can be supplied as bunker fuel. As a result, tight supply conditions are expected to continue through April, according to a Japan-based trader.

Oil refiners have reportedly informed suppliers that bunker fuel supply to the marine market will be reduced by around 50% from April.

Following this expected cut, bunker suppliers are focusing entirely on fulfilling existing term contract commitments. As a result, they are not in a position to offer any spot volumes for delivery in late March or April.

As a result, availability across all fuel grades at key Japanese ports—including Tokyo, Chiba, Yokohama, Kawasaki, Nagoya, Yokkaichi, Mizushima, Kashima, Tokuyama and Oita—is being handled strictly on an enquiry basis.

Meanwhile, bunker demand is expected to be lower on 20 March due to the Vernal Equinox Day public holiday.

By Tuhin Roy

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