Oil Disruption Drives Japan To Expand Crude Purchases From Nigeria

Japan has increased its crude oil imports from Nigeria as refiners scramble to offset supply disruptions from the Middle East following the outbreak of the Iran war, signalling a notable shift in global oil trade flows and creating new export opportunities for Nigeria and other non-Middle Eastern producers.

Industry data released by the Petroleum Association of Japan showed that refinery utilisation rates remained subdued at 67.8 per cent for the week ended April 11, largely unchanged from 67.7 per cent in the preceding week.

The figures remain significantly below the over 80 per cent levels recorded prior to the escalation of hostilities in late February, underscoring the operational strain on Japanese refiners amid constrained crude availability.

The disruption has been particularly impactful given Japan’s heavy reliance on Middle Eastern crude, which typically accounts for about 95 per cent of its total imports.

The ongoing conflict has complicated shipments through the Strait of Hormuz, a critical chokepoint for global oil supplies, forcing Japanese buyers to urgently diversify their sourcing strategy.

Officials indicated that the supply outlook could improve marginally in the coming weeks, supported by the release of crude from Japan’s strategic petroleum reserves and efforts to secure alternative supplies.

So far, the country has managed to replace more than half of the volumes it imported via the Strait of Hormuz in May last year.

Nigeria has emerged as one of the key beneficiaries of this shift, alongside other oil-producing nations such as Malaysia, Azerbaijan, Brazil and Angola.

The increased demand for Nigerian crude reflects its compatibility with certain refining configurations and its availability in the spot market, even as logistical and technical constraints limit the pace of substitution.

Despite the diversification push, analysts caution that Japan’s ability to fully replace Middle Eastern crude remains limited. Many of the country’s refineries are specifically configured to process medium-sour grades typical of the Middle East, making large-scale substitution with alternative crude types operationally challenging.

According to an analyst at Rystad Energy, Nithin Prakash, , Japan could increase the share of non-Middle Eastern crude in its import mix to between 30 and 50 per cent in the short term.

However, he noted that a complete transition away from Middle Eastern supply is unlikely due to structural refinery constraints and feedstock optimisation requirements.

To navigate these limitations, refiners are expected to adopt blending strategies, combining residual Middle Eastern crude with light-sweet grades from the United States and West Africa, including Nigeria, as well as medium grades from the Caspian region and parts of Latin America.

This shift in crude slate composition is also expected to influence product yields. Analysts project higher output of gasoline and naphtha, while production of diesel and jet fuel could decline, reflecting the lighter nature of the substitute crude grades.

For Nigeria, the development presents a short-term boost to crude export demand amid ongoing efforts to stabilise oil production and improve foreign exchange earnings.

However, the sustainability of this demand will depend on the duration of the Middle Eastern disruption and Japan’s longer-term energy sourcing strategy.