"Escape the Strait of Hormuz"? Japanese government announces: July crude oil imports will be "100% bypassing the strait"

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Japanese Prime Minister Sanae Takaichi announced that in July, 100% of Japan's nationwide crude oil imports will come from alternative sources outside the Strait of Hormuz, and stated that stable supply has been secured until March 2028. This marks a significant breakthrough in Japan's energy diversification strategy amid the shocks from the Iran war.

At a cabinet meeting on Thursday, Takaichi stated that July's crude oil supply from alternative sources is expected to reach 100% of the previous average monthly consumption. Crude imports from the United States are expected to increase more than tenfold compared to the same period last year. She also noted that in June, the proportion of supply from alternative sources was about 80%.

Takaichi further announced that, through a combination of alternative imports and release from strategic reserves, Japan has extended the period of stable supply assurance by about a year, covering until the end of March 2028. She also stated that Japan does not plan to release additional oil reserves this month. These remarks provide a clear signal of supply security to the market, helping to ease concerns about energy security for Japan, a major global crude oil importer.

From "Ninety Percent Dependence" to "Complete Diversion"

Japan previously relied heavily on the Strait of Hormuz as a crude oil transport route. In 2025, 94% of Japan's crude oil was sourced from the Middle East, with 93% transported via the Strait of Hormuz. Iran has effectively blocked the strait, and despite a fragile ceasefire between the US and Iran, military clashes between the two sides continue in the region.

Takaichi stated at the cabinet meeting: "Thanks to joint efforts from all parties, even though over 90% of our oil once depended on the Strait of Hormuz, it now appears we are able to source all our crude oil from regions outside the strait."

Achieving this goal took months of gradual progress. In early April, Takaichi said about half of May's crude imports would be from alternative sources; in late April, she raised this proportion to about 60%; now, in July, 100% substitution has been achieved.

Major Expansion of Supply Sources

To fill the gap left by Middle Eastern supplies, Japan has expanded its crude oil procurement to Central and South America, Africa, and Asia. Japan will also source crude from Canada, and the first batch of crude oil from Mexico is expected to arrive in Japan in July.

Meanwhile, crude oil imports from the US have surged, with July imports expected to be more than ten times the average monthly level of the same period last year, becoming a major pillar in alternative supply.

In terms of reserves, according to Reuters, as of June 8, Japan held oil reserves equivalent to 201 days of consumption, including government reserves for 107 days, corporate reserves for 92 days, and 3 days of joint reserves with oil-producing countries. Since March 16, Japan has begun releasing reserves equivalent to about 50 days of domestic consumption, and since May 1 has further used 20 days' worth, with no plans for additional releases at present.

Refinery Adaptation Remains a Practical Challenge

Despite alleviation of supply quantity pressure, Japan's refining industry still faces structural challenges. According to Bloomberg, since Japanese refineries are mainly equipped for Middle Eastern crude, processing crude from other regions may require extra analysis and modifications.

Shunichi Kito, President of the Petroleum Association of Japan, said at a May press conference, "This involves a considerable amount of work," and each refinery may be separately assessing how to adjust equipment. He added that refineries need to "carefully study mixing ratios, how different crude characteristics adapt to existing equipment, and how far it can go without significantly impacting operating conditions."

This means that even with source issues resolved, whether Japan’s refining capacity can fully handle diversified crude remains a potential factor in supply chain stability.

Takaichi to Promote International Coordination at G7 Summit

Takaichi will depart for Europe on June 13, first holding talks with the leaders of the UK and Italy, then attending the Group of Seven (G7) Summit in France.

She stated that at the summit she will raise the issue of oil supply, specifically including: calling for the free and safe passage of key maritime routes including the Strait of Hormuz; promoting expansion of strategic oil reserves in Asia and other regions in cooperation with the International Energy Agency (IEA); and deepening cooperation between oil-producing and consuming countries.

"All maritime routes, including the Strait of Hormuz, must remain safe and freely accessible. This is crucial," Takaichi said.

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