In September 2024, Japan imported a total of 72.87 million barrels of crude oil, primarily from the Gulf Cooperation Council (GCC) countries: the United Arab Emirates, Saudi Arabia, Kuwait, Qatar, and Oman. Data from Japan’s Agency for Natural Resources and Energy reveals that oil continues to be a vital energy source for the country, fulfilling about one-third of its overall energy requirements.
Leading suppliers
During this month, the UAE and Saudi Arabia were the leading suppliers of oil to Japan, collectively accounting for 81.4 percent of the imports. The UAE stood out with 31.33 million barrels, while Saudi Arabia contributed 27.98 million barrels. Although imports of crude oil from the United States rose to 3.84 million barrels in September, making up 5.3 percent of the total (an increase from 3.3 percent in August), the GCC nations remain Japan’s primary crude oil providers. Other minor sources included East Asia (0.8 percent), Central and South America (0.8 percent), and Oceania (0.1 percent).
Recent import trends
In July 2024, Japan’s oil imports from the UAE amounted to 31.07 million barrels, representing 49.1 percent of the nation’s total imports, according to data from Japan’s Agency for Natural Resources and Energy. This suggests that Japan imported approximately 63.32 million barrels of oil that month, with Arab oil making up 97.8 percent, or 61.92 million barrels. Previously, the Agency reported that in June, oil imports from the UAE totaled 25.84 million barrels, which was 41.3 percent of total imports. In June, Japan imported around 62.54 million barrels of oil, with 96.4 percent (or 60.26 million barrels) sourced from four other Arab nations in addition to the UAE: Saudi Arabia, Kuwait, Qatar, and Oman.
Budget requests for fiscal 2025
Regarding Japan’s budget proposals, general-account budget requests for fiscal 2025 submitted by government ministries and agencies by the recent deadline are expected to reach approximately 117 trillion yen, setting a new record for the second consecutive year, as reported by Jiji Press. This figure exceeds the previous high of 114.385 trillion yen requested for fiscal 2024. The increase is largely due to rising interest payments on Japanese government bonds (JGBs) and a significant rise in defense spending prompted by escalating security concerns in East Asia. The budget requests also encompass funding for initiatives aimed at tackling inflation, promoting wage growth, addressing the nation’s declining birthrate, and enhancing defense capabilities. In a press conference, Japan’s Finance Minister Shunichi Suzuki noted that the government intends to conduct a thorough assessment of the budget requests to ensure fiscal discipline and avoid unwarranted budget expansion.
CEPA negotiations initiated
In September 2024, the UAE and Japan initiated discussions aimed at establishing a Comprehensive Economic Partnership Agreement (CEPA). President His Highness Sheikh Mohamed bin Zayed Al Nahyan highlighted the deep-rooted ties between the UAE and Japan, which are founded on a long history of strategic collaboration across various sectors. He expressed his hope that the initiation of CEPA talks would further strengthen these connections, opening up new avenues for cooperation and fostering sustainable economic growth for both nations and their citizens.
Commitment to enhanced cooperation
As the UAE and Japan progress with CEPA negotiations, the President remarked that the launch of these discussions underscores a shared commitment to enhancing their relationship through increased cooperation. He emphasized that by facilitating investment and fostering innovation, the agreement will significantly contribute to the economic diversification efforts of both nations, while simultaneously providing greater opportunities for collaboration between their respective business communities.
Read more: UAE, Japan bolster ties as non-oil trade hit $7.4 billion in H1 2023
Growth in non-oil trade
The recently announced CEPA talks are rooted in the robust trade relations between the two countries. The UAE is Japan’s leading trading partner in the Arab world, accounting for 40 percent of Japan’s exports to Arab nations. In return, Japan ranks among the UAE’s top 10 global trading partners.
Non-oil trade between the UAE and Japan has continued to flourish in the first half of 2024, reaching $8.1 billion. For the entirety of 2023, total trade stood at $17.3 billion, reflecting a 17.4 percent increase compared to 2022. The UAE’s Comprehensive Economic Partnership Agreement Program is a key element of national strategies aimed at fostering sustainable growth and economic diversification. This program plays a crucial role in elevating non-oil foreign trade, which surged to record levels in the first half of 2024, rising 11.2 percent year-on-year to reach AED1.395 trillion. Since its launch, the program has successfully facilitated the signing of 11 agreements with strategically important countries on the global trade landscape, including six agreements that are currently in effect.
For more news on energy, click here.
