Highly dependent on Hormuz! Japan's crude oil imports in April plummeted by 66%, hitting the lowest level since 1962.

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Japan's crude oil imports have plummeted due to disruptions in shipping through the Strait of Hormuz caused by the US-Iran conflict, exposing the country's heavy dependence on Middle Eastern energy and having a profound impact on the overall energy supply pattern in Asia.

According to Reuters, data released Friday by Japan's Ministry of Economy, Trade, and Industry (METI) showed that Japan's crude oil imports in April plunged nearly 66% year-on-year to 850,000 barrels per day, the lowest level since November 1962. This figure reflects the severe impact on global energy supply chains from the disruption of shipping through the Strait of Hormuz since the US and Israel launched war against Iran on February 28 this year.

Imports from the Middle East dropped 68% year-on-year, with both Saudi Arabia and the UAE—the two largest suppliers to Japan—cutting deliveries by more than 60%. Meanwhile, domestic refined oil sales in Japan fell 11.3% year-on-year in April to 2.04 million barrels per day, and petrochemical feedstock naphtha sales shrank even more sharply by 35.6%.

Strait of Hormuz Blockade: About One-Fifth of Global Oil and Gas Supply Disrupted

The Strait of Hormuz is a key transit route for about one-fifth of the world's crude oil and liquefied natural gas (LNG). Since the war against Iran commenced on February 28, Iran has effectively taken control of the strait, leading to a sharp contraction in Middle Eastern crude exports.

According to tanker tracking data from European analytical firm Kpler cited by Nikkei Asia, during March to May, Middle Eastern crude oil exports are projected to drop 48% year-on-year, while the overall global crude export decline is only 10%. By Gulf state: Saudi exports are set to drop 29%, UAE 33%, while both Kuwait and Iraq are expected to see export drops exceeding 90%. For Iran, exports remained largely unchanged from March to April but are expected to plunge 87% in May due to the US naval blockade.

Several crude oil tankers have already left the Gulf region, but the energy flow through the strait remains far below prewar levels. Saudi Arabia is attempting to export oil by alternative routes via the Red Sea, yet its overall export capacity is significantly lower than before the conflict. The Red Sea-Asia route must pass through the Bab el-Mandeb Strait near Yemen, where the Houthi forces, allied with Iran, pose a potential threat to shipping.

Japan Suffers the Most, Middle East Dependence Suddenly Highlighted

Among major crude oil importing countries, Japan has been hit especially hard. Analysis by Nikkei Asia shows that during March to May, Japan's crude oil imports dropped about 47% year-on-year, ranking fourth among all analyzed countries and the largest drop among the world's top ten crude importers.

Before the war, 90% of Japan’s crude oil imports came from Saudi Arabia and the UAE; by May, this proportion had dropped to 60%. To fill the gap, Japan has sped up imports of US crude, which now accounts for over 20% of Japan’s total oil imports as of May, up from just 2% in February.

The Japanese government began drawing on strategic petroleum reserves in late March, which can still cover more than 200 days of domestic consumption. Prime Minister Sanae Takaichi stated on April 30 that Japan expects to maintain naphtha supply at least through the end of the year and beyond by procuring from the US and other countries. However, the full restoration of free navigation in the Strait of Hormuz remains uncertain, and many believe that tensions in the Middle East will persist, increasing pressure on Japan to further diversify its supply sources.

Asian Refiners Cut Output, Naphtha Shortage Impacts Downstream Industries

The supply contraction has already rippled downstream through the industrial chain. Refiners in Japan and other Asian regions further cut run rates in April and May. Japan’s gasoline sales in April fell 2.6% year-on-year to 693,875 barrels per day; kerosene sales fell 13.3% to 120,524 barrels per day; naphtha sales saw the steepest decline, plummeting 35.6% year-on-year to 406,231 barrels per day.

Naphtha shortages are already having a substantive impact on downstream industries: Japanese food packaging companies have begun switching to black-and-white or transparent designs to cope with raw material shortages. Globally, from March to May, naphtha exports declined 23%; among them, UAE (the largest Middle Eastern producer) saw exports drop 87%, and Saudi Arabia 27%. Japan, as the world’s second-largest naphtha importer, saw imports plunge 58%, the steepest fall among the top five importers.

Varied Impact Across Asia, Europe Relatively Resilient

The impact of this supply shock has been pronouncedly uneven across Asian countries. In Southeast Asia, Vietnam saw the largest drop in crude oil imports, down 51%; Malaysia was down 43%. Some emerging markets, due to tight fiscal constraints and limited petroleum reserves, have already experienced interruptions in refined products sales due to supply shortfalls.

In contrast, China and India have been less affected. China’s crude oil imports from March to May are expected to be down 18% year-on-year; India’s dropped around 3% over the same period and is actively seeking alternative supplies from Russia and Venezuela.

Europe has been comparatively resilient, benefiting from diversified supply sources from the North Sea, the US, North Africa, and the Caspian Sea. From March to May, Greece’s crude imports were up 34%, the UK up 9%, and Spain up 7%.

In terms of LNG, Japan has a relatively low proportion of LNG imports from the Middle East, with imports down 11%—smaller than the drops seen for crude oil and naphtha. However, a major Qatari production facility was attacked in late March, losing 17% of its capacity. A senior Qatari official said that recovery would take three to five years. Qatar accounts for 20% of global LNG exports, which have now plummeted by 94%.

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