Japan taps deeper oil cushion

Japan will release an additional 20 days’ worth of oil reserves from May as Tokyo tries to shield domestic fuel supplies from continued disruption in the Middle East and reduce its exposure to shipments that pass through the Strait of Hormuz. Prime Minister Sanae Takaichi told a cabinet meeting on April 10 that the move would come from the public stockpile, adding to emergency releases already under way since mid-March.

The decision marks a further escalation in Japan’s energy contingency response at a time when the Strait of Hormuz remains under severe strain despite a two-week ceasefire between the United States and Iran. The waterway is one of the world’s most important oil chokepoints, and its disruption has hit Japan especially hard because the country depends on the Middle East for about 95% of its oil imports. Takaichi’s government has been racing to prevent shortages, stabilise prices and reassure refiners, transport operators and households that fuel will continue to flow.

Tokyo had already moved ahead on March 16 with the release of reserves equivalent to 50 days of consumption, combining privately held stocks with state reserves and supplies jointly held with producing nations. That initial step was announced before a formal coordinated action by the International Energy Agency, underscoring the urgency felt by Japanese officials as tanker traffic through Hormuz became severely constrained. The new plan adds another layer of insurance rather than replacing the earlier programme, signalling that authorities believe the market shock may last longer than first expected.

Officials say Japan still has considerable room to act. As of April 7, the country held reserves covering 228 days, including 143 days in the public stockpile. That buffer gives policymakers flexibility, but it also reflects the scale of the threat they see. Refiners have already been forced to adjust operations as crude availability tightens, and the government is attempting to manage not only total supply but also how fuel is distributed across the country. Concerns have centred on keeping essential sectors supplied first, particularly healthcare, transport, agriculture, fisheries and livestock production.

Japan’s strategy goes beyond drawing down reserves. Takaichi said the government expects that by May more than half of oil imports will be secured through routes that do not involve the Strait of Hormuz. That shift is central to Tokyo’s effort to avoid becoming hostage to a single maritime corridor while conflict risk remains elevated. Officials have not identified every supplier publicly, but the Ministry of Economy, Trade and Industry has indicated that Japan is seeking alternative barrels from a wide range of countries, including Malaysia, Azerbaijan, Brazil, Nigeria and Angola.

The United States is set to play a larger role in that reshaping of supply. A ministry document cited by Reuters said oil imports from the US in May would be four times higher than a year earlier. Japan imported about 189,000 barrels a day from the US in May last year, equal to roughly 8% of total crude purchases for that month. Tokyo is also drawing on Middle East supplies that can bypass Hormuz, including shipments from Saudi Arabia’s Red Sea outlet at Yanbu and from Fujairah in the United Arab Emirates. Those routes do not eliminate vulnerability, but they reduce reliance on the narrow strait at the centre of the crisis.

Domestic politics and inflation pressures are also shaping the response. Takaichi has paired the reserve releases with fuel price measures meant to keep retail gasoline around a nationwide average of ¥170 a litre, even if crude prices remain elevated. Officials have warned that a prolonged supply shock could otherwise push pump prices much higher and strain households as well as businesses already dealing with cost pressures. Finance Minister Satsuki Katayama has also flagged the fiscal burden of existing subsidy measures, suggesting that energy security is becoming not only a supply issue but a budgetary one.