Japan breaks rank with the West, buys oil from Russia above price cap
03 Apr 2023 17:35:49
Tokyo, Apr 03: Japan has ditched the United States to purchase Russian crude oil above the $60-a-barrel cap, saying it needed it to ensure access to energy from Moscow. The oil purchases by Japan represent a break in the US-led efforts to impose a global $60 per barrel cap on purchases of Russian oil. However, a report by The Wall Street Journal said Tokyo, which is Washington’s closest ally in Asia, got the US to agree to the exception.
Most European nations stopped purchasing Russian oil in response to the invasion of Ukraine in February last year. The G7 nations which include Japan and European Union and Australia, last year agreed to a $60 a barrel price cap on Russian seaborne crude oil to reduce Russia’s income from selling oil while preventing a surge in global prices.
The price cap allowed non-EU nations to continue importing Russian crude oil but restricted shipping, insurance, and reinsurance companies from handling cargoes of Russian crude around the globe unless it is sold for below $60 a barrel. On 30 September last year, the EU nations granted an exception to the $60 a barrel cap for oil purchases by Japan. In the first two months of this year, Japan purchased nearly 748,000 barrels of Russian oil for 6.9 billion yen, which translates to $52 million, or slightly lower than $70 a barrel. Japanese Prime Minister Fumio Kishida last month made a surprise trip to Ukraine and met President Volodymyr Zelenskyy. Also, Japan is the only G7 country that is not supplying lethal weapons to Ukraine. Japan heavily relies on imports of energy as the Asian nation has almost none of its fossil fuels. The WSJ report quoted some analysts saying that Japan’s dependency on Russia’s oil is due to the country’s hesitancy to fully back Ukraine against Vladimir Putin.
Russia accounts for nearly one-tenth of Japan’s natural-gas imports. Most of what Japan gets shipped from Moscow comes from the Sakhalin-2 project in Russia’s Far East. Last year, Japan imported 4.6 percent more natural gas from Russia than the previous year.