Kuwait maintains its standing as Japan's fourth significant oil provider, despite a 22% decrease in oil exports in May.
In a recent development, Kuwaiti crude oil exports to Japan have experienced a significant drop, marking the second consecutive monthly decline. According to data from May 2025, exports fell by 22.2%, amounting to 4.23 million barrels or approximately 137,000 barrels per day, compared to the same period last year.
The decline can primarily be attributed to two main factors. Firstly, Kuwait’s crude oil output remained stable at 2.42 million barrels per day in May 2025, slightly below its OPEC+ production quota and among the lowest production levels since 2021. This constrained output likely limited export volumes.
Secondly, Japan has been diversifying its sourcing strategy, reducing its reliance on Kuwaiti crude in favor of other Middle Eastern producers. The country's total crude oil imports rose by 13.9% year-on-year to reach 2.4 million barrels per day in May 2025. Within the Middle East, Saudi Arabia and the UAE significantly increased their supplies to Japan, with Saudi exports rising by 29.3% to 981,000 barrels per day and UAE exports slightly up to 980,000 barrels per day.
The ongoing geopolitical and economic uncertainties are affecting global oil prices, as reflected in the price of Kuwaiti crude oil, which was reported at $69.23 per barrel in May 2025. Despite the decreased exports, Kuwait retained its position as the fourth-largest oil supplier to Japan, accounting for 7.5% of Japan's total crude imports.
It is important to note that the cancellation and rejection of tenders by the Kuwait Oil Company are not related to the slight erosion of Kuwait's market share in Japan. These operational and procurement challenges are separate from the decreased Kuwaiti crude oil exports to Japan.
The uptick in Japan's total crude oil imports suggests a rebound in demand or inventory adjustments by Japanese refiners. However, it is essential to remember that this increase is not solely due to the decreased Kuwaiti crude oil exports.
In conclusion, the decline in Kuwaiti crude oil exports to Japan is primarily due to Kuwait’s restrained oil production close to OPEC+ quota limits and Japan’s increased crude imports from competitor countries like Saudi Arabia and the UAE, which together reduced Kuwait’s share in Japan’s import portfolio.
The industry-wise analysis reveals that the drop in Kuwaiti crude oil exports to Japan can be linked to the energy sector, specifically the oil-and-gas industry, given the variant factors affecting supply and demand. In terms of finance, this decline could impact Kuwait's revenue from exporting crude oil to Japan, as the country remains the fourth-largest oil supplier despite thereduction, demonstrating the ongoing significance of this sector in the global oil market.
