How Japan is managing the energy shock
Bottom lines up front
- Japan navigated the first four months of the Strait of Hormuz closure with relative ease, thanks to ample stockpiles of crude oil and refined products and a diverse slate of liquefied natural gas (LNG) suppliers. But sustained market disruption has taken a heavy toll.
- Recent interviews in Tokyo with Japanese policymakers, oil and gas companies, utilities, and trading houses suggest that deep concern about supply risks, rising energy prices, and the availability of consumer goods is spurring a re-examination of long-held energy security assumptions.
- This paper summarizes the market impact of this supply shock for crude oil and products, LNG, and petrochemicals; the energy security vulnerabilities revealed since March; and potential policy responses as Japan looks ahead to its next strategic energy plan.
As an island nation with one of the lowest degrees of energy self-sufficiency of any major economy—just 13 percent of its energy is produced within its own borders—Japan depends almost entirely on imports to meet its fossil fuel demand. It has experienced numerous supply disruptions, but the US and Israeli attack on Iran and Iran’s closure of the Strait of Hormuz have created the largest oil market disruption in history. For Japan, the risks vary between crude oil and refined products, natural gas, and petrochemicals.
Ample stockpiles and careful planning helped Japan to navigate the oil market disruption, as well as a long-standing commitment to maintain domestic refining capacity sufficient to meet national demand. But Japan’s government is reassessing its supply diversification and dependence on a single choke point.
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Image: Photo taken from a Kyodo News helicopter shows a tanker carrying crude oil from Azerbaijan following its arrival at the Negishi refinery in Yokohama, near Tokyo, on May 12, 2026, as Japan seeks to diversify procurement sources after the Middle East conflict raised concerns over the stability of oil supplies. Kyodo via Reuters Connect