+34
Japan is accelerating efforts to diversify its oil imports away from the Middle East after a major energy shock, with the US emerging as its top supplier in July 2024. The shift includes plans for new pipelines, electric vehicle adoption, and reduced oil demand.
Japan is accelerating efforts to reduce its heavy reliance on Middle East ern oil after a major energy shock, with the United States emerging as its top oil supplier in July 2024.
The shift signals a broader trend across Asia, where other major importers are also reassessing their supply strategies. Among the world's top fuel-consuming nations, Japan is the most energy insecure. It buys overseas 99.9 per cent of the oil it needs, mostly from the Middle East, along with 99.7 per cent of its coal and 97.8 per cent of its natural gas.
Asia follows Japan energy shift
Tokyo springs into action after every major energy shock to reassess its supply sources, making it a bellwether of global trends. Where Japan goes, others in Asia would too. South Korea, another major energy importer, has already announced plans to reduce reliance on the Middle East, vowing to cut imports from any region to 50 per cent of its total. Currently, the Middle East accounts for just over 75 per cent of South Korean oil imports.
India has been less vocal but was trying to diversify even before the war in Iran. Despite the commercial logic that proximity makes sense, especially when shipping costs are high, Japan trusted the Middle East for decades, buying more than 90 per cent of its crude from the region. With hindsight, the policy was a mistake, according to Nobuo Tanaka, a former senior energy official in Japan who later ran the International Energy Agency.
The official message is more diplomatic, but Japanese officials are trying to rectify what they see as a policy failure. The key is diversifying procurement sources and transport routes, according to a cabinet document. The goal is to break free from a structural vulnerability where recurring energy supply instability acts as a bottleneck for economic growth. The government is discussing the plan, and a formal announcement including import targets and taxpayer money to support it may come before year-end.
Documents also mention supporting construction of new pipelines to bypass the Strait of Hormuz, allowing Japan to keep buying crude from the United Arab Emirates and Saudi Arabia without worrying as much about instability in Iran. Japan may not have the numbers sorted, but it is not waiting for the end of the war to make changes.
US becomes top oil supplier
In July, according to the latest monthly data, the US was its main provider of oil, accounting for 37 per cent of total petroleum imports. Mexico and Latin America provided another 3 per cent. If history serves as any guide, Japan has demonstrated it can shift oil consumption when national security is at stake.
Back in the late 1970s, the country consumed more than 5.5 million barrels a day, generating more than 60 per cent of its electricity by burning crude and fuel-oil. By 2025, Japanese oil consumption had fallen to a 55-year low of less than 3 million barrels a day. If the mantra in the 1970s and 1980s was get oil out of electricity, the next objective should be more radical: get oil out of transportation.
Japan EV adoption lags behind
Japan gave the world the first mass-produced hybrid car, Toyota's Prius. Hybrids have helped reduce gasoline consumption by about half over the last two decades. But Japan, the world's fourth-largest car market by sales totals, lags in adoption of pure electric vehicles. Only about 2 per cent of new car sales in Japan are full EVs, well below the 28 per cent average in Europe, and even trailing the US and Canada.
The International Energy Agency believes the high share of the population living in apartments with limited access to private parking, combined with a limited charging network, are constraining EV sales. That makes EVs an important lever for reducing oil imports, which would make diversification easier. Alongside plans to finance pipelines to bypass the Strait of Hormuz, Tokyo should work harder to boost EV sales, with a focus on expanding charging infrastructure.
Reduce kerosene and diesel use
It also should try to reduce oil usage in heating. Rural Japan relies on kerosene stoves, an oddity among industrialised nations. If Tokyo manages to squeeze down gasoline and kerosene demand, what would be left is diesel and other petrochemical feedstock. As the world's fourth-largest chemicals producer, it imports huge amounts of refined petroleum products used in plastics and other materials.
Reducing dependency on the Middle East would be easier if overall Japanese oil demand drops further. The fewer barrels it needs to buy, the easier it is to shift purchases. Turning one-off statistics into sustained flows won't be easy, but Japan's history suggests it can adapt when needed.
smh
brisbanetimes:This story was compiled and edited by the HeadTopics newsroom and HT AI from the reports above.
Japan Energy Insecurity Oil Imports Middle East Diversification South Korea Pipeline Investment Electric Vehicles Shale Revolution Japan Oil Imports Middle East Oil Reliance US Oil Supplier Electric Vehicle Adoption Energy Diversification
Australia Latest News, Australia Headlines
Similar News: You can also read news stories similar to this one that we have collected from other news sources.
Jarome Luai suddenly in the middle of world’s biggest rivalryThe NRL superstar will be supporting competing brands as the face of the Chiefs.
Read more »
Chalmers Blames Middle East Conflict for Inflation Ahead of Rate HikeTreasurer Jim Chalmers deflects blame for inflation onto global oil prices and geopolitical tensions rather than wage growth, as Australia faces a near-record tax haul and imminent interest rate increase.
Read more »
Chalmers Blames Middle East War for Inflation Ahead of Expected RBA Rate HikeTreasurer Jim Chalmers has blamed the Middle East war for pushing up petrol prices as new budget figures show a near-record tax take, with the Reserve Bank widely expected to raise interest rates on Tuesday.
Read more »