Fuel costs on a board at a fuel station at night time in Tokyo, Japan, March 16, 2026. /VCG
Japanese Prime Minister Sanae Takaichi is visiting the United States to strengthen the US-Japan alliance, however escalating turmoil within the Strait of Hormuz is testing each the power of that partnership and Japan’s power technique.
With the battle between Iran and the US and Israel disrupting oil flows, Tokyo faces mounting strain to safe provides whereas managing rising home gas prices.Â
On March 16, the Japanese authorities started releasing 80 million barrels of oil – the biggest drawdown for the reason that reserve system was established in 1978 – to offset provide disruptions brought on by instability in Hormuz. The emergency measure is predicted to cowl solely about 45 days of consumption, underscoring the stakes if tensions persist.
The transfer adopted an earlier March 11 determination, when Takaichi introduced that Japan would act independently moderately than look ahead to International Energy Agency coordination. This marked a departure from many years of multilateral precedent, signaling Japan’s urgency in stabilizing home provide.
Tokyo has additionally launched gas subsidies to include value spikes, aiming to maintain gasoline round 170 yen per liter ($1.07) and lengthening help to diesel, heavy oil and kerosene. However, these measures are straining an already tight fiscal place.
Deep-seated vulnerabilities
Analysts say the present disaster is much less a sudden shock than an acute flare-up of a long-standing structural weak spot: Japan’s heavy dependence on Middle Eastern power.
According to Japan’s Ministry of Economy, Trade and Industry, 95.1 p.c of Japan’s crude oil imports got here from the Middle East as of January 2026, with about 73.7 p.c transported by way of the Strait of Hormuz. Any disruption to this route successfully locations Japan’s power lifeline in danger.
The scenario has change into extra acute in recent times. As Japan scaled again imports from Russia, its reliance on Middle Eastern suppliers climbed additional, to round 96 p.c. In this context, extended instability within the Strait shouldn’t be merely a value shock – it poses a systemic provide danger.
Chen Yan, government dean of the Japan Enterprise (China) Research Institute, stated the Takaichi authorities has but to be taught from the 1973 oil disaster. Japan stays closely reliant on Arab power provides whereas usually taking divergent positions in diplomacy and worldwide politics. “This is a clear contradiction,” he stated.
The 1973 disaster dealt a extreme blow to Japan’s economic system, prompting Japan to ascertain its strategic reserve system within the first place. Yet regardless of many years of coverage changes, the core challenge of provide focus stays unresolved.
Chen famous that Japan’s early launch of reserves displays an effort to shortly include rising oil costs. Oil underpins not solely business but additionally agriculture, meals logistics and day by day transport, particularly in rural areas, making households extremely delicate to gas prices. He warned that surging power costs may considerably erode Japan’s financial development this yr, an consequence the federal government is eager to keep away from.
Economic strain mounts
The influence of rising power prices is already spreading throughout the Japanese economic system.
Refiners have been the primary to reply. According to Bloomberg, at the very least one Japanese refinery has canceled deliberate exports of gasoline, jet gas and diesel for March to prioritize home provide, successfully shifting from export exercise to emergency stabilization.
Manufacturing can be starting to really feel the squeeze. Data from the Bank of Japan reveals refinery working charges have declined, whereas energy-intensive industries equivalent to chemical substances, transport and heavy manufacturing face mounting price pressures if oil costs stay elevated.
The auto business – residence to international giants like Toyota Motor Corporation, Honda Motor Co., Ltd. and Nissan Motor Co., Ltd. – is especially weak. Its just-in-time manufacturing mannequin is dependent upon tightly synchronized logistics, which means any disruption in gas provide may shortly cascade into broader manufacturing delays.
Households are additionally below pressure. Higher gas, electrical energy and fuel costs are anticipated to erode disposable revenue, doubtlessly weighing on consumption.
Meanwhile, Japanese buying and selling homes are scrambling to safe various provides from the United States, Africa and Southeast Asia. But such changes take time and sometimes include larger procurement and transportation prices.
Risk of a worsening cycle
Financial establishments warn that sustained excessive oil costs may set off a detrimental suggestions loop in Japan’s economic system.
Mizuho Bank estimates that if crude costs stay within the $90-$100 vary, Japan’s annual commerce deficit may widen by almost 10 trillion yen. A weaker yen would then push up import prices additional, reinforcing upward strain on costs.
In a extra pessimistic situation, economists at Nomura Research Institute undertaking that if oil costs attain $130 per barrel, Japan’s GDP may very well be diminished by 0.65 proportion factors inside a yr, whereas inflation may rise by 1.14 p.c.
With tensions involving the United States, Israel and Iran exhibiting little signal of easing, Chen stated it is unlikely that Japan can considerably curb oil costs by way of reserve releases alone. “If the disruption proves prolonged, it’s uncertain whether Japan’s current oil reserves will be sufficient to last through the crisis,” he stated.
Chen added that the present battle additionally exposes Japan’s weaknesses in renewable power.Â
“Japan has been lukewarm or even opposed to renewables such as solar and wind power,” he stated, including this shortcoming in flip amplified the influence of the continued power disaster.
Source: CGTN