Data from the Petroleum Association of Japan showed that Japanese refineries processed oil at over 70% of their capacity for the first since March. This was due to crude being released from their stockpiles, and other alternative sources. Japan, which is usually reliant upon the Gulf region for 95% of its crude oil imports, began switching to crudes originating in the U.S. and the Caspian area, as well as Latin America, after the U.S. and Israel's war against Iran began late February. It also bought a cargo non-sanctioned Russian oil. The government began releasing oil from its stocks on March 16 to help ease the impact of the shortage of supply due to the closed Strait of Hormuz. This is Japan's largest oil release. The PAJ data revealed that the utilisation rate at Japanese refineries rose to 77.3% in the week ending May 2, and to 73.3% in the following week. This is up from the?below 70 percent seen in April. Due to the Golden Week holiday last week, PAJ released data for two weeks. Idemitsu Kosan, Japan's third-largest refinery company, and Cosmo Energy Holdings are Japan's second and third largest refining companies. They said last week that they were sourcing their oil from the Gulf, bypassing the Strait of Hormuz and other places.

Idemitsu Kosan stated on Tuesday that it expects the reopening of Hormuz for navigation to occur between July and September. Dubai benchmark oil prices are expected to drop to pre-war levels at the end the next fiscal year, ending March 2027.

Cosmo?Energy said that it expects Gulf crude oil production to return to normal in August, with the purchase of crude oil stabilizing from September.

Oil prices were above $100 per barrel on Wednesday as investors continued to price in Middle East supply disruptions due to the war.

LNG STOCKS are up

The war has had a less significant impact on Japan's gas purchases because it only imports 6% of its LNG from sources that must pass through the Strait of Hormuz.

According to the Industry Ministry, LNG stocks held by major Japanese utilities increased slightly to 2,12 million metric tonnes as of May 10, from 2.07 millions tons a week earlier, but were still below levels seen a year ago. (Reporting and editing by Christian Schmollinger in Tokyo, Yuka Obayashi, and Katya Golubkova)

(source: Reuters)