Eneos secures enough crude through September, seeks source diversification

TOKYO, July 3 : Eneos Holdings, Japan’s biggest oil refiner, has stabilized its oil procurement and secured sufficient alternative crude supplies through September after the Iran war disrupted Middle Eastern supply, its chief financial officer said.

“We have a good outlook for supplies through September. The situation has become much more stable,” Eneos CFO Soichiro Tanaka told Reuters in an interview on Thursday.

The U.S.-Israeli war on Iran highlighted the vulnerability of the Strait of Hormuz, the key Middle Eastern waterway that handled about a fifth of global oil trade before the conflict. Japan sourced 94 per cent of its crude imports from the Middle East in 2025, leaving it heavily exposed to regional disruptions.

Eneos has replaced the lost volumes mainly with U.S. crude and secured Middle Eastern supplies via routes that bypass the strait, while also buying smaller volumes from Azerbaijan, Tanaka said.

The disruption is likely to lead to discussions on diversifying crude procurement in cooperation with the Japanese government, he said.

“From the perspectives of risk hedging and national energy security, there is no doubt that reducing dependence on the Middle East over the medium to long term would be preferable,” Tanaka said.

However, he stressed the need to balance energy security with economic viability.

“We will explore how we can diversify our supply sources over the medium to long term while working with the government to ensure it is economically viable,” he said.

Tanaka said Japan has maintained stable oil supplies thanks to long-standing relationships with producing countries, government support and substantial strategic petroleum reserves held by both the public and private sectors.

However, the disruption has weighed on refinery operations. Eneos’ refinery utilisation rate would have been about 86 per cent of capacity in January to March without the conflict, but fell to 81 per cent, Tanaka said. In April to June runs also came in below the company’s original plan, he said, without providing details.

Eneos aims to raise refinery utilisation, excluding scheduled maintenance, to 90 per cent of capacity by fiscal year 2027, although prolonged instability in the Middle East could complicate that goal.

Despite lower refinery runs, the earnings impact has been limited as stronger overseas petroleum product prices partly offset the losses, Tanaka said.

“Overall, the impact has been slightly negative, but it has not been a major hit to earnings.”