Middle East Crude Oil Exports Plummet, Impacting South Korea and Japan

Disruptions to maritime transport in the Middle East, stemming from the conflict between Iran and the United States, have led to a significant reduction in crude oil volumes originating from the region between March and May. Consequently, South Korea and Japan, which import substantial amounts of crude oil from the Middle East, have emerged as the most affected among major global economies. On May 30th, Japan's Nikkei newspaper published an analysis based on data from Kepler, a European maritime data analytics firm. During this period, crude oil departures from the Middle East are projected to fall by 48% compared to the same period last year.

Country-specific reduction rates show Kuwait and Iraq experiencing export drops of over 90% each. The United Arab Emirates (UAE) saw a 33% decrease, while Saudi Arabia's exports fell by 29%. Iran, which controls the Strait of Hormuz, reported export volumes similar to the previous year in March and April, but saw an 87% decline in May due to strengthened U.S. maritime blockade measures.

The sharp decline in crude oil exports from the Middle East has directly impacted the economies of South Korea and Japan, which have a high dependence on energy imports from the region. From March to May this year, Japan's crude oil imports decreased by 47% compared to the same period last year, marking the largest reduction rate among the top 10 global crude oil importing nations. South Korea also saw its crude oil imports decline by 31% during the same period. As of February, Japan relied on the Middle East for 90% of its imported crude oil, while South Korea depended on the region for 70%. China, with a Middle East dependency of around 40%, experienced a more limited impact, with its crude oil imports decreasing by only 18% during the same period.

Japan has shown moves to substitute crude oil imports from the Middle East with U.S.-produced oil. Japan's imports of U.S. crude oil, which stood at 2% in February, significantly increased to over 20% by early May.

The sharp decline in naphtha exports from the Middle East has also affected the global petrochemical market. Global naphtha exports fell by 23% from March to May.