Japan Diversifies Energy Imports Amid Middle East Crisis

Japan is set to announce an energy import diversification plan that includes provisions for supporting Middle East pipelines. The goal is to reroute export oil flows away from the Strait of Hormuz.

The plan comes after Japan sourced nearly all its crude oil imports from the Middle East before the US-Israeli war with Iran. Following the conflict, the Japanese government quickly secured alternative suppliers, including the United States, Canada, African oil producers, and Azerbaijan.

However, this diversification has come at a significant cost. Last month, Japan's total import bill reached an all-time high of $76.39 billion, driven by higher international oil prices. This surpasses the previous record set just a month earlier, suggesting that this month's import bill could also set a new record.

Japan is one of the world's largest LNG importers and has been burning more coal and less gas for power generation due to elevated liquefied natural gas prices. The country has also made several releases of crude oil from strategic storage to mitigate the war's impact on its energy security and economy, but this has left strategic reserves depleted.