Japan sees oil product use falling over next five years

Japan sees oil product use falling over next five years

Tokyo, 31 March (Argus) — Japanese oil product demand is forecast to decline by an average 1.5pc/yr over the next five years, with the country's 2050 carbon-neutral target accelerating electrification and decarbonisation efforts.

Japan's economy, trade and industry ministry (Meti) predicts that overall domestic oil product consumption will drop to 2.44mn b/d in the April 2026-March 2027 fiscal year, down by 7.1pc from an estimated 2.6mn b/d in 2021-22. Demand will likely continue to fall until 2026-27, following a recovery from a Covid-19-triggered slump in the 2021-22 fiscal year.

Japan's carbon-neutral goal is prompting electric vehicle (EV) expansion and a move to alternative fuels such as hydrogen and ammonia. This is expected to accelerate a decline in the country's oil product demand on a mid- to long-term basis, Meti said.

Gasoline demand is forecast to drop to 703,000 b/d in 2026-27, down by 9.8pc from 779,000 b/d in 2021-22, pressured by increased fuel efficiency and the EV shift. The government last year set a target for new commercial vehicles that are smaller than 8t by weight to be fully electrified or powered by carbon-neutral fuels after 2040. Japan also pledged to ban the sales of new gasoline-only cars and shift to passenger EVs