Japan's Energy Crisis May Continue to Escalate as Oil Reserves Released Separately

(Source: China Electric Power News)

Reprinted from China Electric Power News

The ongoing tension in the Middle East, with the Strait of Hormuz being blocked, has first caused Japan to feel the “suffocation.”

On March 16, the Japanese government announced the release of its oil reserves, totaling approximately 80 million barrels, equivalent to about 45 days of domestic oil consumption, setting a new record. Usually, countries coordinate reserve releases under the framework of the International Energy Agency, but this is Japan’s first unilateral action since establishing its national oil reserve system in 1978.

Li Qingru, a researcher at the Japanese Studies Institute of the Chinese Academy of Social Sciences, told China News Service that Japan’s first independent release of national oil reserves indicates that supply risks are imminent, and waiting for international coordination is no longer an option. “This means the Japanese government judges that current energy risks are more severe than previous oil crises.”

Japan relies heavily on imports for energy. Although it has attempted to improve its energy structure by introducing nuclear power—once accounting for about 30% of electricity generation—after the 2011 Fukushima nuclear disaster and the Great East Japan Earthquake, many nuclear plants were shut down, and the gap was again filled by fossil fuels.

Japanese media report that over 90% of Japan’s crude oil depends on imports from the Middle East, most of which is transported through the Strait of Hormuz. This route is considered Japan’s “lifeline” for energy supply.

Given the worsening situation in the Middle East, the Strait of Hormuz has effectively been blocked. The latest monthly report from the International Energy Agency states that the global oil market is facing the most severe supply disruptions in history. As a result, international oil prices continue to rise, with Goldman Sachs predicting that the March average price of Brent crude will exceed $100 per barrel.

High dependence on oil makes Japan highly sensitive to price fluctuations. Recently, domestic gasoline prices in Japan have also risen significantly. Reports indicate that on March 11, the retail price of gasoline in Tokyo exceeded 190 yen per liter. To control fuel prices, the Japanese government has announced it will not only release oil reserves but also restore subsidies to oil wholesalers.

While these measures may ease Japan’s short-term oil supply pressures, the long-term outlook remains uncertain. The risk of continued blockage of the Strait of Hormuz may persist for a long time. Industry experts believe that without additional supply, as existing oil reserves are depleted, Japan will face greater energy security risks.

The risks are not limited to energy alone but could trigger chain reactions. Rising energy costs will affect corporate production and wages, increasing the burden on households, squeezing disposable income, and ultimately suppressing consumer demand. Weak consumption can then hinder economic recovery, creating a negative cycle.

In fact, Japan’s inflation rate has remained high in recent years. Data released by Japan’s Ministry of Health, Labour and Welfare shows that due to persistent inflation, after adjusting for price increases, Japan’s real per capita wages in 2025 are projected to decrease by 1.3% compared to the previous year, marking four consecutive years of decline. Experts and media in Japan believe that with real wages continuing to fall and prices rising, consumer stagnation may occur, putting Japan’s economic recovery under pressure.

The spillover effects of the worsening Middle East situation could further exacerbate this trend.

Li Qingru said that on one hand, Japan’s economic recovery is weak, and domestic demand is sluggish, so it needs to continuously expand liquidity and increase fiscal spending to stimulate growth. On the other hand, high inflation requires the government to tighten policies and curb rising prices, creating a clear policy conflict. “Balancing these issues is already difficult, and with external factors now providing strong inflationary stimuli, Japan’s policy challenges will become even greater.” (Wang Mengyao)

Editor: Shen Xinrui