Oil Tanker Attacks Near Iran Put the Squeeze on an Unexpected Party: Japan




 

The Strait of Hormuz, the world's most important oil chokepoint, is notoriously tiny. On Thursday, Japan was stuck right in the middle of it.

Early in the day, two tankers were reportedly attacked in the Gulf of Oman, which leads into the Strait of Hormuz: a tiny water passage that links the energy giants in the Persian Gulf to the energy-hungry Asian markets. Iran is on one side of the Strait; Oman's on the other. The strait's importance can't be overstated: about 40% of the world's physical crude traded daily passes through it, according to Rystad Energy.

Both the tankers were bound for Japan, according to the Associated Press, with at least one registered to a Japanese shipping company. Thursday's attack followed reports last month from Saudi Arabia that several oil tankers in the region had been sabotaged. (It's unclear who's responsible for any of the incidents.) The latest episode immediately heightened fears of an interruption to flows through the region-there are few other alternatives-particularly as tensions have been rising between U.S. and Iran over the revival of sanctions.

For Japan, the timing was particularly bad: Japanese Prime Minister Shinzo Abe was in Tehran this week, the first Japanese leader to visit in four decades. He was meeting with Iran President Hassan Rouhani, who was pressuring Japan-a firm ally of Washington-to sidestep U.S. sanctions and resume buying Iranian oil.

Japan has not been doing so, choosing instead to comply with the revival of U.S. sanctions and the withdrawal of a waiver that had allowed Japan to continue importing Iranian oil until the beginning of May.

That has put the country in an awkward position. Japan is the fourth largest consumer of oil in the world, coming only after the U.S., China, and India, according to the U.S. Energy Information Administration (EIA). It also relies almost entirely on imports to get its oil, making it one of the world's largest importers. And for the last several years, both the U.S. and Iran have been suppliers.

Japan is one of the U.S.'s largest export markets for crude and petroleum products, according to the EIA, a trend that began in 2015 as the shale boom took off and hit a historical high in November of last year.

But on the import side, U.S. product is still only a fraction of Japanese demand.

Taking crude alone-only one part of total petroleum exports-U.S. product made up only 2% of total crude imports into Japan in April, according to data from Japan's Ministry of Economy, Trade and Industry (METI). By contrast, Japan's Iranian crude imports in April, the final month Japan had its waiver, were more than four times the size of the American imports.

Even still, there's a larger risk here for Japan, and that's in the Strait itself. Just four countries-Saudi Arabia, Kuwait, Qatar and the U.A.E.-make up nearly 80% of Japan's crude imports.

How does all that oil get to Japan? Through the Strait of Hormuz.

More must-read stories from Fortune:

-Manufacturers are leaving China-for reasons beyond the trade war

-Cruises to Cuba are banned, but the ships sail on

-This is the one subject in the U.K. that's as toxic as Brexit

-German security chiefs say Alexa should provide evidence in court

-Listen to our new audio briefing, Fortune 500 Daily

Keep up with the world's most powerful women with Fortune's Broadsheet newsletter

COMMENTS

More Related News

Iran says ready for more US prisoner swaps
Iran says ready for more US prisoner swaps
  • World
  • 2019-12-09 13:06:45Z

Iran said Monday it was open to more prisoner swaps with the US while stressing an exchange at the weekend was not the result of formal negotiations with its arch-foe. US President Donald Trump thanked Iran for what he called a "very fair negotiation" after an American scholar was released Saturday in exchange for an Iranian scientist held in the United States. The exchange involved Xiyue Wang, a Chinese-born American held in Iran since 2016, and Massoud Soleimani, an Iranian scientist detained in the United States since 2018.

Japan PM Abe says visit by Iran
Japan PM Abe says visit by Iran's Rouhani being arranged
  • World
  • 2019-12-09 12:26:43Z

Japanese Prime Minister Shinzo Abe said Monday his country is arranging a visit by Iranian President Hassan Rouhani because it wants to play a greater role in resolving a nuclear impasse between Tehran and Washington and in relieving tensions in the Middle East, the source of more than 80% of Japan's oil. Japan, a U.S. ally that has traditionally had friendly relations with Iran, seeks to serve as a mediator between the U.S. and Iran, a role that is also expected by the international community, Abe said. Local media have reported that it is being arranged for later this month, before or after Rouhani's planned visit to Malaysia to attend an Islamic leaders' conference.

Historical documents show Japan
Historical documents show Japan's role in WWII sex slaves
  • World
  • 2019-12-08 01:11:35Z

Japan's army during World War II asked the government to provide one sex slave for every 70 soldiers, according to historical documents reviewed by Kyodo News service that highlight the state role in the so-called "comfort women" system. The 23 documents were gathered by Japan's Cabinet Secretariat between April 2017 and March 2019, including 13 classified dispatches from the Japanese consulates in China to the Foreign Ministry in Tokyo dating back to 1938, according to Kyodo. The sex slaves issue has been a source of a painful dispute between South Korea and Japan.

Pensacola naval base shooting tests US relations with Saudi
Pensacola naval base shooting tests US relations with Saudi
  • World
  • 2019-12-07 20:33:30Z

Top U.S. defense and military officials on Saturday reaffirmed America's continued commitment to and relationship with Saudi Arabia in the wake of a Saudi Air Force student's shooting spree at a Navy base in Florida. Defense Secretary Mark Esper and others attending a security conference in California played down any initial impact on U.S.-Saudi ties. President Donald Trump described a conciliatory conversation with the Saudi king.

Twelve protesters killed in Baghdad attack as US imposes new sanctions
Twelve protesters killed in Baghdad attack as US imposes new sanctions

Twelve demonstrators were killed and dozens wounded late Friday after unidentified men attacked an anti-government protest camp in Baghdad, marking a new violent turn for the anti-government movement. The bloodshed came as the US accused Iran of "meddling" in Iraq's turmoil and slapped sanctions on Iran-backed groups for allegedly cracking down on protesters. Youth-dominated allies have thronged the Iraqi capital's main protest camp in Tahrir Square since early October, denouncing the government as corrupt, inept and beholden to Iran.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Economy