The G20 will aim to reach a consensus on energy security during the leaders' summit meetings later this week in Osaka, Japan, amid rising tensions in the Middle East, Japanese Prime Minister Shinzo Abe said Wednesday.
"The peace and stability in the Middle East is vital not only for Japan but also for the world's peace and prosperity," Abe said at a press conference in Tokyo. He was visiting Iran as the first Japanese premier in almost 41 years at the time of recent ship attacks near the Strait of Hormuz, the world's top choke-point for oil and LNG traffic. "As the chair country, we aim to reach consensus among the G20 member countries on the importance of energy security."
"I intend to fulfill my responsibility as the chair," Abe said ahead of the G20 Osaka summit June 28-29. G20 members account for roughly 60% of global oil production and about 80% of oil consumption.
US President Donald Trump said Tuesday that "any attack by Iran on anything American will be met with great and overwhelming force. In some areas, overwhelming will mean obliteration."
The governments of Saudi Arabia, UAE, the UK and the US issued a joint statement Monday calling on Iran to "halt any further actions which threaten regional stability, and urge diplomatic solutions to de-escalate tensions."
"These attacks threaten the international waterways that we all rely on for shipping," the governments said, according to a statement released by the US State Department. "Ships and their crews must be allowed to pass through international waters safely."
The major escalation in risks to oil and gas shipments through the Strait of Hormuz dominated talks between ministers on the sidelines of the recent G20 energy meeting in Karuizawa, Japan, prompting the group to commit to finding ways to increase energy security for producing and consuming nations.
G20 ENERGY MINISTERIAL
G20 energy ministers stressed the need for more international cooperation to ensure energy security in the wake of recent petroleum tanker attacks near the Strait of Hormuz, Japan's Minister of Economy, Trade and Industry Hiroshige Seko said on June 16.
Speaking at after the end of the G20 energy ministerial meetings in Karuizawa, Seko said: "The need for the international community's cooperation over the world's energy security is placed highly."
Two oil tankers were attacked June 13 just outside the Strait of Hormuz, with the US, UK and Saudi Arabia blaming Iran. A similar attack off the eastern UAE port of Fujairah occurred a month earlier. Iran denies any involvement.
The attacks are not specifically mentioned in the final communique agreed to by all G20 energy ministers, but the statement stressed the importance of "reliable energy infrastructure to prevent energy supply disruptions" and "diversification of energy sources, suppliers and routes, facilitation of open, flexible, transparent, competitive, stable and reliable markets."
IEA READY TO RESPOND
International Energy Agency Executive Director Fatih Birol said at Karuizawa on June 14 that he was very concerned about the ship attacks. He said the IEA was ready to respond in the event of a supply disruption with a range of options, from providing members immediate policy advice to coordinating a release of emergency oil stockpiles.
Asked if oil importers will seek alternative supplies from outside the region to avoid the Strait of Hormuz, the IEA's Birol said: "I think this will be a situation observed by oil importers, especially in this part of the world." But Birol said he does not expect a major shift in oil flows anytime soon.
IEA requires member countries to hold emergency oil stockpiles equivalent to at least 90 days of net oil imports. The reserves can be held by private companies, governments or agencies.
About 18.5 million b/d of seaborne oil exports passed through the Strait of Hormuz in 2016, mainly to customers in Asia, according to the US Energy Information Administration. Japan, China, India and South Korea are the biggest buyers of the heavier sourer crudes that Middle East producers tend to supply.
The strait is also crucial for LNG shipments from Qatar, which exported about 6.6 million mt in April, equivalent to about 23.5% of global LNG supply, according to S&P Global Platts Analytics.
