Japanese Prime Minister Sanae Takaichi has announced that the nation's crude oil imports in July will be sourced entirely from alternative routes bypassing the Strait of Hormuz, stating that stable supply has been secured until March 2028. This marks a significant milestone in Japan's energy diversification strategy amidst the impact of the Iran conflict.
Speaking at a cabinet meeting on Thursday, Takaichi indicated that the volume of crude oil from alternative sources in July is expected to reach 100% of the previous monthly average consumption. Imports from the United States are projected to surge more than tenfold compared to the same period last year. She also noted that the proportion of supply from alternative sources was approximately 80% in June.
Takaichi further announced that, by combining alternative imports with releases from strategic reserves, Japan has extended its stable supply guarantee by about one year, now covering through the end of March 2028. She added that Japan does not plan any additional releases of petroleum reserves this month. These statements provide a clear signal of supply security to the market, helping to alleviate external concerns over the energy safety of this major global crude importer.
From "90% Dependence" to "Complete Diversion"
Japan had previously been heavily reliant on the Strait of Hormuz for crude oil transportation. In 2025, 94% of Japan's crude originated from the Middle East, with 93% of that volume shipped through the Strait of Hormuz. Iran has effectively blockaded the strait, and despite a fragile ceasefire between the US and Iran, military clashes continue in the region.
"Thanks to the efforts of all parties, it appears we have been able to source all crude oil from outside the strait, despite previously depending on the Strait of Hormuz for over 90% of our oil," Takaichi stated at the cabinet meeting.
This goal was achieved through months of gradual progress. In early April, Takaichi mentioned that about half of May's crude imports would come from alternative sources; by late April, this ratio was raised to approximately 60%; now, 100% substitution has been realized for July.
Significant Expansion of Supply Sources
To fill the gap left by Middle Eastern supplies, Japan has expanded its crude procurement to regions including Central and South America, Africa, and Asia. Japan will also procure crude from Canada, with the first shipment from Mexico expected to arrive in Japan in July.
Concurrently, imports from the United States have seen a substantial increase, with July volumes projected to be more than ten times higher than the monthly average from a year ago, forming a crucial pillar of the alternative supply.
Regarding reserves, as reported, Japan held petroleum reserves equivalent to 201 days of consumption as of June 8. This comprises 107 days of government reserves, 92 days of corporate reserves, and 3 days of joint reserves with oil-producing nations. Japan began releasing reserves equivalent to about 50 days of domestic consumption starting March 16, and further tapped an additional 20 days' worth from May 1. There are currently no plans for new releases.
Refinery Adaptation Remains a Practical Challenge
Although supply-side pressure has eased somewhat, Japan's refining sector still faces structural challenges. According to reports, as Japanese refinery equipment is primarily configured for Middle Eastern crude, processing crude from other regions may require additional analysis and modifications.
Shunichi Kito, Chairman of the Petroleum Association of Japan, stated at a May press conference that "this involves a considerable amount of work," with each refinery likely assessing individually how to adjust its facilities. He added that refineries need to "carefully study blending ratios, how different crude characteristics perform on existing equipment, and how far they can go without significantly impacting operating conditions."
This implies that, even with the crude sourcing issue addressed, whether Japan's refining capacity can fully absorb diversified crude remains a potential variable for supply chain stability.
Takaichi to Promote International Coordination at G7 Summit
Prime Minister Takaichi will depart for Europe on June 13, holding talks with leaders of the United Kingdom and Italy before attending the G7 summit in France.
She stated she would raise oil supply issues at the summit, including: calling for ensuring the free and safe passage of key maritime routes, including the Strait of Hormuz; promoting cooperation between Asia and other regions with the International Energy Agency to expand strategic petroleum reserves; and deepening collaboration between oil-producing and consuming nations.
"It is crucial that all maritime routes, including the Strait of Hormuz, can be navigated safely and freely," Takaichi said.
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