By Yuka Obayashi

Japan's weaker oil demand amid the coronavirus pandemic is currently balanced by reduced supply from OPEC+ nations, the head of the Petroleum Association of Japan (PAJ) said on Thursday.

"If we need more crude, we can always buy oil from the spot market," Tsutomu Sugimori, the association's president, told a news conference.

The world's largest oil exporter, Saudi Aramco, has reduced the volume of July-loading crude that it will supply to at least five buyers in Asia, seven sources said on Monday. That followed a deal struck by the Organization of the Petroleum Exporting Countries (OPEC) and its allies to keep production cuts of 9.7 million barrels per day in place until the end of July.

Japan's demand for gasoline and gas oil has been picking up since May as coronavirus curbs have been lifted gradually, although demand for jet fuel has stayed dull, said Sugimori, who also serves as president of JXTG Holdings Inc.

Demand for gasoline is seen to have dropped 25% in May from a year earlier with gasoil demand falling 11%, he said, citing an estimate by JXTG.

The drop in demand will be smaller in June as economic activity continues to recover, he said, predicting a 10% fall in gasoline and a 5% decline in gasoil.

"The toughest issue for us is the wide gap in the recovery of demand by type of fuel," Sugimori said, pointing to slumping demand in jet fuel.

"We need to make a difficult operational adjustment by increasing output of gasoline and gasoil while keeping kerosene fraction at low levels," he said.

Kerosene and jet fuel belong to the same grade of oil products.

Refiners may need to run their secondary units to meet weak demand for kerosene or jet fuel and import more gasoline and gasoil to fill a shortage, Sugimori said.

(Reporting by Yuka Obayashi; Editing by Clarence Fernandez)