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As Iran maintains its chokehold on the Strait of Hormuz, Japan’s government will begin releasing 30 days’ worth of oil from its state-owned reserves on Thursday.
This is part of a broader plan to release up to 45 days’ worth in total—its largest ever—alongside additional releases from private-sector stockpiles, to minimize disruptions in the world’s fourth largest economy.
Japan holds one of the world’s largest oil stockpiles with roughly 254 days of consumption across government and private reserves. But it still imports over 90% of its crude oil from the Middle East, leaving Japan exposed to during the US and Israel’s war with Iran.
While the government has avoided strict energy-saving mandates so far, it has warned against panic buying of toilet paper amid supply concerns. And as fuel prices hit record highs of 190 yen ($1.20) to the liter, Japan has rolled out subsidies for fuel products to cap gasoline price at around 170 yen ($1.07) per liter.
Japan is better prepared than many of its neighbours when it comes to an energy crunch. And it has the 1970s oil shocks to thank for that.
The global economy was hit by stagflation in the 1970s, triggered by the Oil Crisis of 1973. Following the Yom Kippur War, Arab oil producers cut supply and raised prices. Crude oil prices roughly quadrupled within months, sending shockwaves through import-dependent economies like Japan.
The impact was severe. Japan relied on imports for nearly all its oil, and its postwar economic boom abruptly stalled. Panic buying spread and in 1974, Japan’s economy contracted for the first time since World War II, marking the start of slower growth.
A second shock, the 1979 Oil Crisis, drove prices up again. But by then, Japan had begun adapting—investing in energy efficiency, diversifying energy sources and building strategic reserves.
