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Tokyo — Japan is closely monitoring rising tensions in the Middle East, Minister of Economy, Trade and Industry Hiroshige Seko said Friday, adding that the country has strategic petroleum reserves that can last up to seven months in the event of any supply disruptions.

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"We will closely monitor the situation to see whether there is any impact on Japan's energy supply and corporate activities," Seko said at a press conference in Tokyo.

Seko was responding to a question on whether Japan can secure alternative crude oil supplies of about 3 million b/d in the event of an emergency in the Middle East, from where roughly 90% of the country's oil imports are sourced.

"Japan already has seven months' worth of petroleum reserves in the country as part of its system to ensure stable energy supply," Seko said.

At the end of March, Japan had a total of 80.66 million kiloliters or 507.34 million barrels of crude oil and petroleum products in the total SPR, which equates to 222 days of consumption, according to METI data.

"We will take appropriate action based on the international situation going forward," he said.

Middle Eastern supplies accounted for 89.6% of Japan's average crude imports of 3.19 million b/d in the first quarter of 2019, according to METI data. That is up from 86.2% over the average 3.07 million b/d imports in Q4 2018.

SEEKING IRANIAN REPLACEMENT

A rise in the Middle East's oil import share came at a time when Japanese refiners were struggling to ship in Iranian oil because of confusion surrounding shipping, insurance and banking rules during a 180-day US sanctions waiver.

Japan's imports of Iranian oil in March jumped 48.8% year on year to 292,648 b/d -- the highest level since September 2016 -- and doubled from 135,013 b/d in February, when Iranian barrels were imported for the first time in four months.

Japanese refiners suspended Iranian oil imports as of April, as the US recently decided not to extend sanction waivers for eight countries, including Japan, for importing Iranian oil beyond May 2.

Executives at Japanese refiners said this month that the refiners are looking to replace Iranian oil from other key suppliers in the Middle East among other sources.

Japan's largest refiner, JXTG Nippon Oil & Energy, is replacing Iranian oil with incremental supplies from Saudi Arabia, while Idemitsu Kosan and Showa Shell are looking at supplies from Saudi Arabia, the UAE and Kuwait among others.

RISING MIDEAST TENSIONS

NYMEX and ICE Brent crude futures have strengthened since Monday, following apparent sabotage attacks on oil tankers in the Persian Gulf and drone attacks on two pumping stations along Saudi Aramco's East-West pipeline.

The attacks were followed by an announcement Wednesday that the US State Department was removing non-essential staff from Iraq, after weeks of statements by US officials that Iran-backed agents were threatening US assets in the country.

Iraqi and international oil sector officials have said there had been no withdrawals by oil companies operating in Iraq, despite reports by local media.

This week, Iranian Foreign Minister Mohammad Javad Zarif visited countries including India, Japan and China, which are also its major oil customers.

"China is one of the important partners of the Islamic Republic, both a political partner and a very close economic one, and a remaining member in the JCPOA (Joint Comprehensive Plan of Action)," Zarif said on his arrival in Beijing on Friday, according to Iranian state TV.

Iranian President Hassan Rouhani said on May 8 that the country would reduce its commitment to the Iran nuclear deal, known as the JCPOA, during a televised cabinet meeting Wednesday, a year after Washington's announcement of a unilateral exit from the deal.

The reduced commitments will take effect within 60 days, Rouhani said.

"Our visits (to the other countries) was more about announcing [Iran] conditions and consultations," Zarif said.

"Saving the JCPOA is the responsibility of the international community. If the international community feels that the JCPOA is an important achievement, it should take practical steps like Iran."

-- Takeo Kumagai, takeo.kumagai@spglobal.com

-- Aresu Eqbali, newsdesk@spglobal.com

-- Edited by Jonathan Fox, newsdesk@spglobal.com