With the de facto closure of the Strait of Hormuz continuing, how well prepared was Japan’s energy security? The first installment argued that the closure of the strait has thrown Saudi Arabia’s geopolitical advantages into relief; in this second installment the focus shifts to Japan and the question is confronted directly. Are the institutions Japan built in response to the lessons of the oil shocks functioning as intended? And how should we view the vulnerabilities of the supply chains that lie beyond stockpiles? Naoki Tamaki, a specialist in Middle Eastern affairs and energy based in Saudi Arabia, examines the matter from several angles.
Key Points
- Japan’s energy security carries two overlapping memories: that of the resource constraints on the road to the Pacific War, and that of the first and second oil shocks. Their lessons survive in institutions: oil stockpiling, energy conservation and the diversification of the power-generation and fuel mix. Japan indeed still holds, among the world’s major economies, a high level of oil stocks.
- Yet the present crisis is not one that can be grasped by viewing crude oil as fuel alone. Through naphtha, crude is also the feedstock of petrochemical products; and its effects reach further still, to materials and intermediate goods, such as fertilizer and aluminum, whose production has been built into the Gulf states. That pressure ripples outward into alternative procurement, the burden of inventory, selling prices and corporate cash flow.
- The question is not only “how many days of oil remain.” It is which feedstocks Japanese industry procures, through which straits, at what prices and with what degree of substitutability–and, beyond that, what interests and relationships Japan holds with which oil-producing states.
The World as Shigetaka Shiga Saw It
Japan’s memory of energy security does not begin with 1973 alone. Even in the Meiji and Taishō eras, one geographer and critic of civilization had already placed sea routes and resources at the heart of the nation’s lifeline: Shigetaka Shiga (1863–1927). Shiga pointed to the importance of oil resources in the development of Sakhalin, and in his later years traveled to the Middle East, where in 1924 he was granted an audience with H.M. Sultan Taimur bin Faisal in Muscat. A pioneer among the Japanese who surveyed the Middle East at first hand, he held a vision that linked the Arab world and Japan. What Shiga saw was not territorial expansion or imperial enlargement. It was a sense of crisis: that so long as the Japanese people remained ignorant of the Islamic world, of where resources lay and of the realities of the sea routes, the nation’s options would in time narrow. In Shirarezaru Kuniguni (Countries Unknown to Japan), published later, Shiga urged that those with ambition should scout the Muslim-majority countries early and acquire sufficient foreknowledge. Around Iraq he glimpsed the coming of an age in which oil would move world history. Oil would become gold. That intuition was also bound up with his insistence on the value of prospecting for resources within Japanese territory, Sakhalin included.
His concern led to a way of seeing oil and sea routes as questions of national strategy. In the same book Shiga warned that to be cut off from oil would be to cut off the nation itself. In time Japan came face to face with the reality that resource constraints narrowed Japan’s strategic options and helped push the country toward the Pacific War. Oil was not merely a fuel whose shortage was inconvenient; it was a condition governing diplomacy, the military, industry and maritime traffic alike.
The Age of Oil and the Paradox of Self-Sufficiency
Although Japan’s economy and technology are far more advanced today, its energy self-sufficiency rate is lower than it was during the prewar and early postwar periods. The paradox becomes clear when the figures are placed side by side. According to statistics from the Agency for Natural Resources and Energy, Japan’s energy self-sufficiency rate for fiscal 2024 (on the IEA basis) stood at only 16.3 percent. By contrast, from the prewar years to the immediate aftermath of defeat, Japan met the bulk of its primary energy needs from domestic coal and hydropower. A simple comparison on identical definitions is not possible, but even in 1950 coal and hydropower together accounted for over 80 percent of primary energy supply. Broadly speaking, the self-sufficiency rate of that time was on the order of 80 percent.
This did not, however, mean that Japan was free of resource constraints. The problem was that even at a stage when the share of oil was still low, Japan had to rely on outside sources for the oil that powered its warships, aircraft, automobiles and mechanized industry. What defined Japan’s strategic reach was not primary energy as a whole but oil. The further Japan advanced into the age of oil, the lower its self-sufficiency fell and the deeper its dependence on the sea routes grew.
The first oil shock of 1973 was the event in which that long memory surfaced as a postwar institution. Against the backdrop of war in the Middle East, the Arab oil-producing states, OPEC members among them, used embargo, production cuts and price rises to show that oil was not only a market commodity but also a source of political power. Crude prices surged, and within Japan came inflation and a panic of hoarding. In the second oil shock of 1979, the Iranian Revolution and the turmoil that followed again bred fears over supply. Through these two shocks Japan came once more to treat oil not as a fuel that the market could be left to provide, but as the lifeline of the state.
Thereafter, Japan built up an oil-stockpiling system, advanced energy conservation, reduced its dependence on oil-fired power and moved toward a policy combining nuclear power, LNG, coal and renewables. As the Agency’s materials show, Japan enacted the Oil Stockpiling Act in 1975 and has accumulated both government and private-sector stockpiles ever since. In this sense, the lessons of the oil shocks have not been forgotten.
But that an institution survives is not the same as its being equal to the present crisis. What Japan faced in the 1970s was chiefly a crisis of crude prices and crude supply. The current Hormuz crisis spans not only crude but petroleum products, petrochemicals, fertilizer, metals, food, logistics, inventory and cash flow. The memory of the oil shocks matters. But the world has grown too complex for that memory alone to explain today’s supply chains.
Stockpiles Buy Time; They Do Not Change Structure
Japan has oil stocks. As of the end of March 2026, Japan’s government stockpiles, private-sector stockpiles, and joint stockpiles with oil-producing countries together amounted to 233 days’ worth under the Oil Stockpiling Act standard and 197 days’ worth under the IEA standard. Government stockpiles alone accounted for 146 days’ worth. Furthermore, in light of the current situation in the Middle East, the government has been releasing oil from its government stockpiles and the joint stockpiles with oil-producing countries since March 26, 2026.
The significance of these stocks is considerable. They keep domestic refineries and distribution networks from halting in the immediate wake of a crisis, and create time for companies and the government to arrange alternative supplies. According to the Agency for Natural Resources and Energy, materials from May 2026 indicate that, whereas alternative procurement covered around 25 percent of April’s volumes, alternative supplies had been secured for roughly 60 percent of May’s and for over 70 percent of June’s. Moves to widen sourcing beyond the Middle East and the United States–to Latin America, the Asia-Pacific, Central Asia and Africa–are also under way.
Here, however, a line must be drawn. Stockpiling is an institution for buying time, not one for changing industrial structure itself. Even with crude in the tanks, unless the grades required match the refining equipment, it does not immediately become the intended product. Even if gasoline and diesel can be supplied at home, it does not follow that naphtha, chemical feedstocks, specialty resins, paints, packaging materials and semiconductor-related solvents will all flow smoothly.
If the crisis ends within a few weeks, its impact on the Japanese economy can be treated as a matter of crude prices, exchange rates and inventory adjustment. But should it drag on over months, the nature of the crisis changes. Stockpiles work at the entrance to a crisis. The longer it lasts, however, the more companies must reckon, in turn, with inventory, alternative procurement, contracts, cash flow, operating plans and selling prices.
Japan’s Lost and Retained Upstream Interests
In considering Japan’s energy security, upstream interests matter alongside stockpiles, and here Japan has a bitter experience. Near the border of Saudi Arabia and Kuwait, off Khafji, there once lay a Japan’s “Hinomaru oilfield” held by the Arabian Oil Company. Discovered by Arabian Oil in 1960 and brought into production from 1961, the field saw its concession on the Saudi side lapse in 2000.
Crude prices were then depressed. The view that oil was a commodity one could procure on the spot market, without holding long-term interests, had spread among parts of Japan’s policy authorities and industry. Seen from today it was a precarious view, but in the market conditions of the time there was a certain rationality to it. The problem is that judgments made in an age of low oil prices continue to exert their effects into an age of high prices.
The moment oil is seen as “something one can buy on the market,” the meaning of holding upstream interests appears to fade. Resources look like commodities when they are cheap, but revert to politics when they become expensive. Crude prices subsequently rose to around 147 dollars a barrel in July 2008. Oil was not, after all, a mere commodity to be bought cheaply at any time.
After losing Khafji, Japan sought an opening in Iran’s Azadegan field. Under the Khatami government Iran was seeking to improve its relations with the international community, and to Japan this looked like an opportunity to make good its lost Middle Eastern upstream interests. But this attempt too, pressed by US sanctions on Iran and the shifts of international politics, ultimately retreated. In 2010 the major Japanese oil and gas developer INPEX agreed with the Iranian side to withdraw from the Azadegan development.
In Abu Dhabi in the UAE, meanwhile, another struggle continued. Abu Dhabi’s oilfield interests were among the few upstream interests left to Japan, and their renewal was no mere commercial negotiation. Combining public finance from the Japan Bank for International Cooperation (JBIC), intergovernmental relations, companies’ operating record and cultural diplomacy, Japan moved to hold on to its interests. In 2007 JBIC concluded with the Abu Dhabi National Oil Company (ADNOC) a loan agreement of up to three billion dollars in total. Lending to ADNOC was repeated thereafter, becoming a financial foundation that underpinned Japan’s stable procurement of crude.
At the sites bound up with Azadegan in Iran and the renewal of the Abu Dhabi interests, oil was not simply a commodity bought at a price. Finance, trust between states, the partner country’s development priorities, companies’ operating capabilities, summit diplomacy, cultural respect: all of these connected to a single barrel. What was lost at Khafji, what could not be fully secured at Azadegan and what has been held together in Abu Dhabi all belong not merely to the question of “how to procure crude” but to the question of “what kind of relationship to hold with resource-producing states.”
Naphtha, a Point of Weakness
Crude oil is at once a fuel and a raw material. It is not only refined into gasoline and diesel; through naphtha it also becomes the feedstock of plastics, synthetic fibers, synthetic rubber, paints, adhesives, packaging materials, medical supplies and building materials. In the current crisis, it was naphtha that most quickly mirrored Japan’s weakness. Markets are accustomed to news of crude prices. But once packaging runs short, paints and solvents become hard to source and chemical shipments grow difficult to predict, the crisis turns at a stroke into a matter of daily life and the factory floor.
According to the Japan Petrochemical Industry Association, in Japan’s naphtha imports in 2024 the Middle East accounted for 73.6 percent of import volume. Imports from the UAE, Kuwait, Qatar and Saudi Arabia alone make up the greater part. However thick the stock of crude, if the naphtha supply chain clogs, petrochemicals begin to creak from a different quarter.
Government and industry are not standing idle either. In its comment on production and shipment results for April 2026, the Japan Petrochemical Industry Association explained that it was striving to maintain supply through naphtha procurement from domestic oil refining, alternative procurement from outside the Middle East and the use of product inventories. It added that stocks of major petrochemical products were not in a situation of immediate supply difficulty. At the same time, the effective operating rate for ethylene stood at only 67.3 percent in April, well below the same month a year earlier.
Here the character of the present crisis shows itself. In government statistics, supply is “adequate”. On the industry’s front line, it is “being kept running.” But for individual companies and at the end of the distribution chain, it becomes hard to see when, at what price and of what quality goods will arrive. A crisis appears not as a nationwide, uniform blackout but first in small items, thin inventories and materials for which there is no substitute.
Spillover to Fertilizer, Aluminum, and Cash Flow
It is not only crude that passes through the Strait of Hormuz. LNG, petroleum products, naphtha, fertilizer, chemicals and aluminum have all been built into international supply chains on the premise of the strait’s stability. Against the backdrop of cheap energy, the Gulf region has raised its presence in petrochemicals, ammonia and urea, and aluminum smelting as well. As a result, disruption in the Strait of Hormuz ripples beyond crude and LNG into the supply risk of downstream and derivative products. When the strait loses function, the impact spreads from upstream to downstream.
Fertilizer is the prime example. The Gulf region, centered on Qatar and Saudi Arabia, is an important source of ammonia and urea. When fertilizer prices rise, they pass through, with a lag, to food prices. For Japan, with its low food self-sufficiency, this is no distant farming problem in another country. When energy prices, fertilizer prices, sea freight and exchange rates move in the same direction, food prices are pushed up through several channels at once.
Aluminum is the same. Against the backdrop of cheap electricity, the Gulf states have grown in presence as a source of primary aluminum ingot and alloy products. Yet aluminum smelting is not completed by electricity alone. It works by bringing in raw materials such as bauxite and alumina from outside and smelting them with the Gulf’s cheap power. If the Strait of Hormuz is impaired, it becomes harder not only to send products out but also to bring raw materials in. Even if primary ingot is comparatively easy to source elsewhere, alloy products carry constraints of specification and quality. Materials used in automobiles, building materials, electrical machinery and packaging cannot simply “be bought from another country.”
The crisis works its way into corporate cash flow as well. The restructuring of the UAE food and consumer-goods company IFFCO is emblematic. According to reports, the Dubai-based company, carrying debt of around two billion dollars, moved toward restructuring through provisional liquidation. This should not be seen as the result of the Hormuz crisis alone. But when freight costs, insurance premiums, inventory and borrowing costs all rise together, pressure falls first on companies already carrying debt. Geopolitical risk appears not only in ports and tankers but on companies’ balance sheets.
Were the Lessons Learned?
So, were these lessons learned? The answer is neither a simple yes nor a simple no. Japan did learn. It has a stockpiling system, has advanced energy conservation and has mechanisms by which government and companies move to alternative procurement in a crisis. Japan’s upstream interests in Abu Dhabi, too, have been held together without snapping the thin thread, by combining finance, intergovernmental relations, a track record and mutual cultural understanding.
But there are parts it could not fully learn. In the age of low oil prices, the meaning of long-term interests such as Khafji became hard to see. And today Japan’s supply chain still depends deeply on the Persian Gulf. In Japan’s crude imports in 2025, the UAE accounted for 43.3 percent and Saudi Arabia for 39.3 percent, with Middle Eastern dependence reaching about 94 percent. Iranian crude, which once held a certain share, all but vanished from Japan’s sources after the reimposition of US sanctions on Iran. Sourcing appeared to have been diversified, but in reality it had been concentrated into a handful of Gulf states.
The problem is the vulnerability of the supply chains that lie beyond stockpiles. Which oilfields does Japan have interests in, and under what arrangements? Can Japan actually take delivery of the crude? Can the tankers pass? Can the refineries process the grades required? Beyond that follow naphtha, petrochemicals, fertilizer, aluminum, food, packaging, freight costs and insurance premiums. At the last, one arrives at the burden of inventory, selling prices and corporate cash flow. The current crisis shows afresh that upstream interests, sea lanes, refining, materials, logistics and corporate finance are joined in a single line.
What Japan needs is not the simple proposition of “ending dependence on the Middle East.” Japanese industry will continue to need its relationships with Saudi Arabia, the UAE, Qatar and Kuwait. The question to ask, rather, is the quality of that dependence: with which countries, with which resources, by which routes and with what degree of room for substitution. Expanding imports from the United States is but one option. In the future, buying crude from Iran under a future political arrangement, or, taking the present experience as an impetus, increasing procurement from the Russian Far East, is politically difficult but should not be ruled out of consideration. Realistically, it is hard to break away all at once from a fuel, feedstock and materials supply chain that spans the countries of the Middle East. That is precisely why Japan needs to widen its procurement options while continuing its Middle East diplomacy. Can it build relationships with resource-producing states not as mere buying and selling, but as relationships encompassing investment, stockpiling, ports, public finance and technical cooperation?
The Hormuz crisis confronts Japan with an old problem in a new form. On the road to the Pacific War, Japan was made to learn the reality that resource constraints narrow the nation’s path. Through the oil shocks, that memory was transformed into the institution of oil stockpiling. But in an age of ever more complex supply chains, stockpiles are not all that is needed. What is required is not the strength to endure a crisis but the power to hold options when one comes. What Shigetaka Shiga sought to see was not the distant foreign land itself, but the question of which sea routes and which resources the nation’s lifeline was tied to. A century on, the Hormuz crisis throws that question back at Japan in a different form. The next question is to whom, and how far, Japan should entrust the security that underpins those options.
*The views expressed in this article are solely those of the author and do not represent the views of any organization, including the institution with which the author is affiliated.
(c) FUSAO ONO/SEBUN PHOTO /amanaimages
