Eneos Holdings' chief financial officer said that the Iran War had disrupted Middle Eastern oil supplies. The company has stabilised its oil procurement, and is able to secure alternative crude supply through September.

"We are confident about our supply through September." In an interview with Eneos' CFO Soichiro Tanaha on Thursday, he said that the situation has?become?much more stable.

The U.S. and Israeli war against Iran exposed the vulnerability of Strait of Hormuz. This key Middle Eastern waterway handled about a quarter of global oil trading before the conflict. In 2025, Japan will import 94% of all its crude oil from the Middle East. This leaves it vulnerable to disruptions in the region.

Tanaka stated that Eneos had replaced the lost volumes with U.S. Crude and Middle Eastern supplies via routes bypassing the strait.

He said that the disruption would likely lead to discussions about diversifying crude oil procurement with the Japanese government.

Tanaka stated that "from the perspective of risk hedging, and national energy security there is no doubt that it would be better to reduce?dependence from the Middle East on a medium-to-long term basis."

He stressed, however, the need to strike a balance between energy security and economic viability.

He said: "We will work with the government in order to make sure that it is economically viable, while exploring how we can diversify the sources of our supply over the medium-long term."

Tanaka stated that Japan has been able to maintain stable oil supplies due to its long-standing relationship with the producing countries. Government support is also a factor, as are substantial strategic petroleum reserves owned by both public and private sectors.

The disruption has had a negative impact on refinery operations. Tanaka stated that Eneos refinery utilization rate would have been?about?86% without the conflict in January to march, but it fell to 81%. Tanaka said that the April-June runs were also below the original plan of Eneos, but did not provide any details.

Eneos wants to reach 90% refinery capacity, excluding scheduled maintenance by 2027. However, prolonged instability in the Middle East may complicate this goal.

Tanaka stated that despite a 'lower run of refineries,' the impact on earnings?has been minimal as higher overseas petroleum product prices partially offset the losses.

"Overall, it was a slight negative impact, but not a major one on earnings." (Reporting and editing by Yuka Okasaka, Kentaro Obayashi)

(source: Reuters)