Japanese imports of crude oil from Saudi Arabia in March rose 3.4% month
on month to an average of 1.29 million b/d, preliminary data from the Ministry
of Economy, Trade and Industry released Friday showed.

METI data is released in kiloliters, which S&P Global Platts converts
into b/d.

Saudi crude imports, which accounted for 39.9% of Japan’s total crude
imports of 3.22 million b/d in March, were up 0.5% year on year.

Japan also imported 522,896 barrels of Bahrain’s Banoco Arab Medium crude
in March, up 1% from 517,959 barrels in February.

Middle Eastern producers’ share of Japan’s crude imports was 91.3% in
March, up from 90.6% a year ago, marking the eighth consecutive year-on-year
rise as a result of increased imports from the UAE and Qatar.

Crude imports from the UAE in March jumped 11.7% year on year and 21%
month on month to 838,692 b/d, driven by increased imports of Murban crude.
These rose 29.4% year on year and 46.3% month on month to 218,725 b/d.

The sharp increase in Japan’s light sour Middle Eastern crude intake in
March was no surprise as Dubai prices were attractive compared with North
American and European light crude pricing benchmarks during the early part of
the first quarter.

WTI’s sustained weakness against Dubai has been the main driver of Asian
appetite for US crude for more than a year, but the North American benchmark’s
discount against the Middle Eastern marker narrowed sharply in the first two
months of 2018, even flipping to a premium of 5 cents/b on February 15.

Reflecting the recovery in the North American benchmark price, Japan did
not import any US crude oil in March, the METI data showed.

In addition, lofty Brent crude prices could have discouraged some
Japanese refiners in the first quarter from purchasing North Sea,
Mediterranean, Southeast Asian and Oceania crude grades that are linked
to the European pricing benchmark.

The Brent/Dubai EFS — a key indicator of Brent’s premium to the Middle
Eastern benchmark that often serves as a barometer of the strength in the
European crude complex — averaged $3.49/b in Q1, the highest quarterly
average since Q2 2014, when it averaged $4.38/b.

— Takeo Kumagai, takeo.kumagai@spglobal.com

— Gawoon Philip Vahn, Philip.Vahn@spglobal.com

— Edited by Jonathan Fox, jonathan.fox@spglobal.com

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