The effective closure of the Strait of Hormuz has intensified Japan's concerns about its reliance on the South China Sea for energy imports, according to Takehiko Matsuo, Japan's vice minister for international affairs at the Ministry of Economy, Trade and Industry, who spoke at the CERAWeek by S&P Global energy conference in Houston, Texas [1]. Tadashi Maeda, chairman of the Japan Bank for International Cooperation, highlighted the heightened risks for Japan's energy security, noting that both the Strait of Hormuz and the South China Sea are critical chokepoints for Japan’s crude oil and LNG imports [1]. The Strait of Hormuz previously handled around 20% of the world's oil shipments, and Japan imports about 90% of its crude oil from the Middle East, much of which transits this strait before passing through the South China Sea [1][2]. A prolonged disruption at either chokepoint could severely affect Japan's energy supply chain, leading to increased import costs and potential shortages for manufacturers and transport providers [1].
Oil prices rebounded in Asia trading on Tuesday, with Brent crude futures for May rising over 3% to $102.96 per barrel and West Texas Intermediate (WTI) futures for May jumping 3.6% to $91.27 per barrel [2]. This uptick followed a sharp sell-off on Monday, when Brent crude fell about 11% to around $99 per barrel after topping $112 on Friday [2]. The market remains volatile, with analysts warning that the current blockage has already tightened global oil markets and Asian crude prices have risen at their fastest pace since the Middle East supply shock, impacting smaller Japanese companies particularly hard [1]. There is an expectation that if the South China Sea were to face additional disruptions, spot prices for crude could spike further, amplifying volatility in the region's energy markets [1].
Former U.S. President Donald Trump claimed on Monday that the United States and Iran had productive conversations regarding a resolution of hostilities in the Middle East and instructed the Department of War to postpone military strikes against Iranian power plants and energy infrastructure for five days [2]. Trump's statement sent oil prices lower and equities higher, but skepticism persists as Iran denied conducting any weekend negotiations with Washington [2]. José Torres, senior economist at Interactive Brokers, noted that repeated attacks on critical energy infrastructure in the Middle East are fueling continued concerns over potential disruptions to production and transportation, and that the risk of an extended war remains a top concern for the market [2].
Japanese industry leaders have called for increased strategic oil reserves and the exploration of alternative energy import routes, including sourcing more from outside the Middle East, such as Alaska [1]. The Japanese government is monitoring the situation closely and is considering the potential release of state oil reserves to mitigate immediate supply shocks [1]. Technical analysis from S&P Global suggests that if Middle East supply remains constricted, key resistance levels for benchmark Asian crude could be tested in the coming weeks, with support likely to form only if alternative routes are secured or geopolitical tensions ease [1]. Iranian state media said Sunday that Tehran would permit safe transit through the strait, except for ships associated with its "enemies" [2].
CONCLUSION
The closure of the Strait of Hormuz has triggered a surge in oil prices and heightened concerns about energy security, particularly for Japan, which relies heavily on Middle Eastern imports. Despite claims of de-escalation, skepticism and ongoing tensions continue to drive market volatility. The situation underscores the urgent need for diversification of supply routes and strategic reserves to mitigate future disruptions.