Crude/condensates exports pointed toward Japan, South Korea and Taiwan are down ~50% y-o-y in March (days 1-29), to just 3.1mbd, while crude exports from the Middle East Gulf to these countries are down 70% y-o-y. Crude/condensates in transit to Japan, South Korea, Taiwan dropped to a record low of ~115 million barrels, down nearly 40% m-o-m, implying there is little supply incoming.
Japan, South Korea, and Taiwan’s vulnerability to supply shocks in the Middle East
The sharp contraction in crude flows to Japan, South Korea, and Taiwan underscores their structural reliance on Middle Eastern supply, with roughly two-thirds of their combined seaborne imports transiting the Strait of Hormuz. This exposure is significantly higher than in other Asian markets: China sources only around one-third of its crude via Hormuz (excluding Iranian barrels, which continue to flow), while also benefiting from access to discounted Russian crude facing limited buyer competition. Southeast Asia receives just under half of its crude through the strait (excl. Iranian oil).
Within Northeast Asia, Japan and Taiwan have been the most severely affected, with exports to both countries down by approximately 70% y-o-y in March (days 1–29). These countries’ vulnerability is further compounded by refinery configurations optimized for sour grades (around 60% of which are supplied by the Middle East) making substitution more difficult and amplifying the impact of disruptions in the region.
Japan appears particularly exposed to a fall in crude imports, with onshore crude inventories below 265 million barrels, 9% under the 2020–2025 seasonal average and 5% lower y-o-y. In contrast, South Korea’s inventories have strengthened, rising by roughly 13% month-on-month as of April 2 and standing about 10% above seasonal norms.
Replacement options
US Gulf Coast and Brazilian barrels could serve as alternative sources of crude, however Northeast Asian buyers are likely to face elevated premiums as refiners in other regions are also competing to replace lost Middle Eastern supply with these same grades. At the same time, freight costs are elevated, further increasing procurement costs: VLCC rates from the US Gulf Coast to Korea have climbed by around 20% since February 28 to 86$/t.
The temporary waiver from the United States to import Russian crude and products for 30 days without triggering secondary sanctions, could also potentially ease immediate supply constraints.
Immediate responses
Northeast Asian governments have responded with a range of emergency measures to stabilize domestic supply. South Korea has implemented export controls on key refined products, capping gasoline, diesel, and kerosene (excluding jet fuel) shipments at 100% of 2025 monthly levels, and extending restrictions to naphtha via a five-month export ban effective March 28 (with limited exemptions).
The South Korean government has also said it could implement driving restrictions if oil prices reached 120$ per barrel.
Japan, for its part, began releasing state-held oil reserves on March 26, which will see the country contribute nearly 80 million barrels to global markets according to the IEA.
The impact on crude arrivals has been gradual due to cargoes loaded prior to the escalation. During the first three weeks of March (days 1–21), imports held at 5.3 mbd as February loadings continued to discharge. However, this buffer has now eroded: between March 22–29, arrivals fell sharply to 3.5 mbd, marking the lowest weekly level in Vortexa’s 2016–2026 dataset.
Impact on refined products
Limited crude supply and replacement options in Japan, South Korea, and Taiwan will likely curtail refined product exports. 45% of these countries’ combined refined product exports go to China, Australia and Singapore, while locations recently deprived of refining capacity (USWC) rely on them for a growing volume of transport fuels (over 55% of seaborne transport fuels imports in 2025)
Looking forward, sustained tightness in crude supply across Japan, South Korea, and Taiwan will not only constrain domestic consumption but also tighten product markets in Wider Southeast Asia (primarily Southeast Asia and Oceania) and the US West Coast, at a time where global markets are already pressured by a decline in transport fuel supply from the Middle East. This could be especially relevant as we move into the higher demand summer season.
Source: Vortexa
