Idemitsu Reroutes Saudi Crude as Red Sea Shipping Risks Persist

Idemitsu Kosan, Japan’s second-largest oil refiner, has started sourcing Saudi crude from Yanbu through the Suez route and around the Cape of Good Hope as shipping disruptions continue to affect Middle Eastern oil flows. The company does not see an immediate threat to stable crude supplies, supported by UAE crude routed through Fujairah and additional imports from North America, its president said on Tuesday, according to several media reports.

Attacks by Yemen’s Iran-aligned Houthis have made the Bab el-Mandeb Strait largely impassable for most Saudi oil shipments, forcing tankers to adopt significantly longer routes. Voyages that previously took around 20 days now require approximately 50 to 60 days. Despite the longer transit times, Idemitsu plans to continue procuring Saudi crude through the Suez route.

Idemitsu declined to provide details about the exact route. However, Saudi Aramco has offered additional crude cargoes for loading from Egypt’s Mediterranean port of Sidi Kerir since July. Crude loaded at Saudi Arabia’s Red Sea port of Yanbu can be shipped to Ain Sukhna in Egypt and then transported through the Suez-Mediterranean Pipeline to Sidi Kerir before being exported.

Japan remains heavily dependent on Middle Eastern crude. The country sourced approximately 94% of its crude imports from the Middle East in 2025, with around 93% of those volumes passing through the Strait of Hormuz. The waterway has effectively been closed by Tehran since the U.S.-Israeli war on Iran began in late February, encouraging Tokyo to use strategic reserves and seek alternative sources.

When asked whether Idemitsu would reduce its reliance on Middle Eastern crude, President Sakai said maintaining access to the region should remain a priority. He cited long-standing relationships between Japanese companies and Middle Eastern producers, along with the suitability of regional crude for Japanese refineries.

Sakai also noted that a major shift toward non-Middle Eastern grades could require expensive refinery modifications, creating what he described as an “unnecessary investment.” However, he acknowledged public concerns about Japan’s dependence on Middle Eastern crude and said the government and industry should discuss an appropriate supply balance.

Under Idemitsu’s new five-year business plan through fiscal 2030, the company is returning greater focus to its core oil and fuels operations, targeting refinery utilization of at least 90%. Its April-June refinery run rate stood at 84%.

Sakai said Idemitsu plans to improve utilization by applying maintenance and corrosion-prevention expertise developed at its Hokkaido refinery across other facilities.

The company also sees liquefied natural gas as a growth opportunity. Through MidOcean Energy, in which Idemitsu announced a $500 million investment in March, it aims to secure LNG offtake and marketing opportunities while expanding its trading activities.

Beyond energy, Idemitsu plans to supply solid electrolytes for Toyota’s next-generation electric vehicles using all-solid-state lithium-ion batteries, with commercial production expected between 2027 and 2028. Demand is also increasing from drones, robots and energy-storage systems, potentially leading Idemitsu to consider additional production capacity by fiscal 2030.

Product Impact and Chemical Commodity Price Impact

Product impact: The immediate impact is higher logistical complexity for Saudi crude reaching Japan. Longer voyages could increase freight costs, extend inventory cycles and raise the need for strategic supply planning. However, Idemitsu’s access to UAE crude, North American supplies and Suez-based Saudi cargoes should limit major disruptions to refinery operations. Higher transportation and crude procurement costs could support regional energy prices if disruptions persist.