Saudi Arabia’s crude oil supplies to Japan rose to a 10-year high in 2016, underlining the kingdom’s strong will to defend its share in the ever competitive Asian markets.

Saudi Arabia’s crude supplies to Japan last year averaged 1.18 mbpd, up 4.7 per cent year on year, and accounted for roughly 36 per cent of Japan’s total imports of 3.31 mbpd, according to S&P Global Platts calculations based on Ministry of Economy, Trade and Industry data. Saudi Arabia’s market share in Japan rose from 33 per cent in 2015, marking the third consecutive year-on-year rise.

"We appreciate that [Saudi Arabia] maintained simple but logical pricing [for crude supplies]," a source with a Japanese refiner said, adding that price was the decisive factor in his company’s decision to buy Saudi crudes.

Saudi Arabia’s market share strategy has worked effectively in Japan as a consequence of its pricing, which were often competitive against similar grades from the Middle East, market sources said. The rise in Saudi crude oil supplies came even as Japan’s total crude imports in 2016 fell to their lowest since 3.19 mbpd imported in 1987. Japan’s 2016 imports fell 2 per cent year on year.

Japanese crude imports from Saudi Arabia rose in 2016 on the back of the kingdom’s response to incremental demand for its oil, coupled with spot supplies from state-owned Saudi Aramco’s leased storage in Okinawa, despite no increase in term import contractual volumes, market sources said.