Northeast Asia's major energy importers were increasingly concerned about potential supply risks due to rising tensions in the Middle East amid the escalation of attacks by Houthi rebels on commercial shipping in the Red Sea.
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Commenting on the attacks on ships in the Red Sea, Kito said he was concerned about the side effect of the frequent attacks, which have already had some impact on broader shipping operations, including the rerouting of container and other ships via the longer Cape of Good Hope route.
The Middle East accounted for 94.6% of Japan's crude oil imports in November, with Saudi Arabia accounting for 42.7% of the total supply, including 1.17 million barrels of Super Light crude, according to preliminary data from Japan's Ministry of Economy, Trade and Industry.
With most Japanese oil tankers transiting the Persian Gulf and few crude tankers using the Red Sea, the "direct impact" of the tensions on the country has been limited to date, Kito said.
The rise in ship attacks in the Red Sea could impact Japan's lifting of crude oil from Yanbu in Saudi Arabia, which could lead to the country taking a longer shipping route to avoid the Bab al-Mandab Strait, or seeking alternative crude supply, said Takayuki Nogami, chief economist at Japan Organization for Metals and Energy Security, or JOGMEC.
MOTIE advisory
South Korea's Korea Gas Corp. and SK E&S officials said Jan. 5 that they were following the government guidance issued Jan. 4 to avoid using the Suez Canal and Red Sea shipping routes.
A source with direct knowledge of the matter also said that Kogas has started taking the Cape of Good Hope route for carrying US LNG cargoes to South Korea, as well as lifting US LNG cargoes from the US Gulf.
"Under the recommendation of the government, Kogas will detour the Suez Canal to use the Cape of Good Hope route for the time being," a Kogas official said.
"We will be very closely monitoring the situations in the Red Sea and the Panama Canal to choose shipping routes later," the official said.
The Ministry of Trade, Industry and Energy asked local shipping companies and commodities importers Jan. 4 to avoid the Red Sea for the sake of safety.
"Amid the continued geopolitical risks in the Red Sea, we have requested shippers and freight importers to proactively consider detouring, as the safety of our vessels and export products come as a priority," the MOTIE said in a statement.
"There have been no major disruptions in the supply of crude and LNG from the region so far as vessels are currently detouring around Africa," it said.
The MOTIE expressed concerns that the recent troubles in shipping routes such as the geopolitical risks at the Suez Canal and the drought at the Panama Canal have led to higher shipping costs and longer durations, which could raise domestic prices, at a time when the government is going all out to address inflation.
Escalating tensions
The Red Sea and its surrounding regions have seen a steady escalation in attacks by Houthi rebels on commercial shipping.
Preliminary estimates of trade diversion away from the Red Sea, according to satellite-based estimates published by the International Monetary Fund's Port Watch Alert, showed that the trade volume flowing through the Bab al-Mandab Strait was down about 38% from a year earlier during the second half of December.
It said these estimates may overstate the reduction in transit volume because some commercial ships may have turned off their transmitters to hide their location from potential attackers.
During the 10 days ending Jan. 2, 2024, estimated transit volumes were down 28% from a year ago at the nearby Suez Canal, where estimates should not be affected by the transmitter issue and which were consistent with 3.1% of global maritime trade being diverted away from the Red Sea during that period, IMF Port Watch said.
Meanwhile, the transit volume surged to an estimated 67% above last year's level at the Cape of Good Hope amid the diversion, the data showed.
On Jan. 1, the Maritime and Port Authority of Singapore said it had been notified on Dec. 31 that the Singapore-registered container ship Maersk Hangzhou had observed a flash on its ship's deck while transiting northbound in the southern Red Sea.
The incident, which took place earlier on Dec. 31, was reported by the US Central Command to be an attack by a missile on the vessel. The MPA was notified about a second attack, about 10 hours after the first attack, by a group of small boats firing small arms at the vessel.
Security forces deployed by CENTCOM successfully responded to both incidents following distress calls by the vessel, and there was no reported fire onboard, the MPA said. It added that the vessel was on its way to Port Said, Egypt.
Singapore also issued a joint statement on Jan. 3 saying that Iran-backed Houthis had significantly escalated attacks on merchant shipping with missiles, small boats and attempted hijackings.