Editor's note: Liu Xu is an executive director of the Center for International Energy and Environment Strategy Studies at Renmin University of China. The article reflects the author's opinions and not necessarily the views of CGTN.

The de facto blockade of the Strait of Hormuz following the US-Israeli attack on Iran in February 2026 has delivered a severe shock to global energy markets. For Japan, which depends on the Middle East for roughly 94% of its crude oil – 90% of which transits the Hormuz Strait – this is not a temporary disruption but a structural crisis. Drawing exclusively on the two reference documents, this commentary analyzes Japan's energy vulnerability, evaluates the government's diplomatic countermeasures, and assesses the challenges to industrial competitiveness.

Structural vulnerability and the crisis impact

Japan's energy self-sufficiency has always been low, as Amane Kobayashi from IEEJ noted, and over-reliance on the Middle East has actually deepened. By 2025, about 94% of its crude oil came from the region. The blockade has made this historical risk tangible. Japan's crude oil imports in March 2026 fell 17% year on year – the lowest since 1989. Imports from Qatar dropped 81%, from Kuwait 64%, and from the UAE 22%.

The damage extends beyond fuel. Naphtha, a crude oil derivative and essential feedstock for plastics, chemicals, and synthetic fibers, faces acute shortages. Over 80% of domestic naphtha normally comes from the Middle East. Ethylene production facilities have been forced to cut output. Shortages of toluene and xylene – key thinner ingredients – have led Nippon Paint to adjust shipments. "Our raw material procurement team is negotiating until late at night every day. Supply is still insufficient," a paint manufacturer official was quoted as saying.

Primary industries are bleeding. Fishing daily fuel costs have risen over 15,000 yen per vessel. The Oi River port in Shizuoka suspended whitebait fishing during the peak Golden Week season because rising expenses made operations unprofitable. Rice farmers face a "triple-high" burden of fuel, logistics, and materials. Some producers are considering reducing acreage or ceasing production. As Kobayashi observed, Japan has failed to learn from the 1973 oil crisis – the problems of Middle East dependency and supplier diversification remain unresolved. National reserves (over 200 days of consumption) and stockpile releases have provided a buffer, but inventories fell to their lowest ever by March 2026. Kobayashi warned that even if the war ends, "it is extremely difficult for the Middle East energy situation to return to pre-February 28 conditions."

Diplomatic countermeasures: Visits, deals, and limits

The Takaichi administration has responded with intensive diplomacy focused on three pillars. Firstly, Vietnam. During the May 2 summit in Hanoi, Japanese Prime Minister Sanae Takaichi and Vietnamese Prime Minister Le Minh Hung launched the first "Power Asia" project – Japanese financial support for crude oil procurement at the Nghi Son refinery (led by Idemitsu Kosan) in exchange for medical supplies such as dialysis tubes exported to Japan. Both leaders pledged to strengthen rare earth supply chains, leveraging Vietnam's substantial reserves.

Secondly, Australia. At the May 4 Canberra summit, Japan and Australia designated six priority critical minerals projects, including rare earth production (Sojitz-JOGMEC joint venture) and a nickel project (Sumitomo Metal Mining, Mitsubishi). The joint statement offers "further investment and subsidy support" and faster permitting. Japanese Prime Minister Takaichi described the relationship as "quasi-allies." Australia supplies about 40% of Japan's LNG and 60% of its coal.

Thirdly, Africa. Japan's Foreign Minister Toshimitsu Motegi visited Kenya, Zambia, Angola, and South Africa, announcing a "three pillars" African diplomacy: Peace support, critical minerals cooperation, and personnel exchange. Zambia's exports are 70-80% copper/cobalt. Angola is an oil producer. Japan will provide technical cooperation from mining to manufacturing.

Additionally, Japan directly engaged Iran. Japanese Prime Minister Takaichi held a phone call with Iranian President Masoud Pezeshkian after the stranded Idemitsu Maru tanker passed through the strait. No transit fees were paid – a result of Japanese government negotiations. Pezeshkian reportedly stated that "the path to diplomacy will be restored if the US government changes its attitude."

Despite these efforts, limitations remain. Alternative supplies from the US, Algeria, and Peru only partially replace Middle East volumes. Russian crude from Sakhalin-2  carries sanctions risk. Japanese refineries are optimized for heavy, sulfur-rich Middle East crude; switching to lighter US shale changes product composition and may reduce product yields. "Japan cannot directly import European policies; it must design its own energy policy through more complex calculations," Kobayashi noted.

Industrial competitiveness: Decline and government response

The energy crisis coincides with a gradual erosion of Japan's industrial competitiveness. A Sumitomo Mitsui DS Asset Management report provides Trade Specialization Index (TSI) data, showing that Japan maintains advantages in automobiles (+0.71), steel (+0.56), and machinery (+0.22), but these are declining. China's auto TSI rose from -0.05 in 2004 to +0.66 in 2025; machinery from +0.13 to +0.41. In services, Japan's digital sector has a deep disadvantage (TSI -0.42), with large payments to US platforms for cloud, software, and streaming. The government has designated 17 strategic sectors for public-private investment, including AI, semiconductors, shipbuilding, and food tech. However, a Nikkei survey of 100 CEOs found that AI/semiconductors and energy security alone accounted for over half of the desired focus – the other 15 fields attracted minimal interest. The automobile industry was excluded from the 17 sectors, shocking industry leaders. A major shipbuilding executive noted that "it's not as simple as digging a dock and installing cranes," emphasizing labor shortages. An energy executive commented that nuclear fusion (one of the 17) "will be a long time before we can actually work on it."

More promisingly, the government is advancing a circular economy action plan with 1 trillion yen in public-private investment by 2030. Targets include raising recycled wrought aluminum to 40% of supply, copper to 20%, and rare earth magnet materials to 30%. The Japanese Ministry of Environment will survey "urban mines" in electronic waste. Environment Minister Ishihara Hirotaka stated, "Amidst intensifying global competition for resource acquisition, we will focus on strengthening the resilience of the resource recycling supply chain." However, government-led industrial promotion in Japan has a poor track record – citing failed "Rising Sun Projects" in domestically produced aircraft and semiconductors. Professor Emeritus Noguchi warned that "designating priority sectors may prevent a flexible shift to the next growth industries."
 

Japan faces a historic test. The Hormuz blockade has exposed the untenability of extreme Middle East dependency. Diplomatic initiatives – Power Asia, Australia critical minerals partnerships, African engagement – have opened new supply routes. The circular economy plan offers a path to reduce import reliance. Yet, the gap between government ambition and private-sector capability remains wide. Crisis management is an area the private sector cannot adequately address, but economic growth is rooted in free competition. Whether Japan can translate this energy shock into lasting industrial resilience will depend on aligning state-led investment with market dynamism – and accepting higher costs as a price for security.

(Cover via VCG)