Japan has been boldly breaking ranks with its Western allies by purchasing Russian crude oil above the agreed-upon $60-a-barrel cap. This is all thanks to an exception authorized by the United States. While many European countries have been reducing their reliance on Russian oil in response to the Ukraine conflict, Japan has been increasing its purchases of Russian natural gas.
However, this isn't entirely surprising given that Japan has very few of its own fossil fuels and heavily relies on imports for most of its energy needs. Some experts believe that this dependency has played a big part in Japan's reluctance to fully support Ukraine against Russia. In fact, Japan is the only member of the G7 not to have provided Ukraine with lethal weapons.
While Russia's natural gas exports to Japan are relatively small, accounting for only around one-tenth of Japan's supply and a fraction of Russia's overall output, the majority of what Russia does export to Japan comes from the Sakhalin-2 project in Russia's Far East.
The G7 nations and Australia had previously agreed to a $60 per barrel price cap on Russian seaborne crude oil. This was meant to reduce Russia's income from oil sales while preventing a global oil price spike. Non-EU countries were still allowed to import Russian crude oil under this cap, but shipping, insurance, and re-insurance companies were prohibited from handling these cargoes unless they were sold for less than the cap.
However, Japan has been granted an exception to the $60-a-barrel cap for oil purchased through September of this year. And in the first two months of 2023, Japan has already bought around 748,000 barrels of Russian oil at a price of approximately $70 a barrel. So while other countries are moving away from Russian oil, Japan is making bold moves to secure its energy needs.
