Author(s)

Ming Qi & Yumo Yang

Abstract

This paper proposes a quantitative optimization model to investigate the oil supply risk from the perspective of the diversification of oil import sources. Japan and South Korea are highly dependent on oil imports from foreign countries. Both countries are seeking sustainable strategies to ensure a con- tinuous and stable oil supply. Effective diversification of crude oil imports plays an important role in energy security. The optimization results imply that Japan faces the highest oil import risk. Japan should reduce oil imports from Saudi Arabia and the UAE. Instead, Japan should import more oil from Russia and Iraq. South Korea should reduce its oil dependence on the Persian Gulf countries. Based on forecasts of oil demand and production, Japan and South Korea will have lower oil supply risks until 2035. It can be attributed to the decreased oil imports and improved energy efficiency for both countries under individual energy efficiency programs. The Middle East countries maintain the dominant positions in oil imports for both Japan and South Korea. Saudi Arabia will remain the largest supplier to both countries.

Keywords

diversification, oil security, optimal imports