Japan Sets Sights on Reducing Middle Eastern Oil Dependence

Japan is signaling a major shift in its energy strategy, aiming to reduce its reliance on Middle Eastern oil imports. According to Bloomberg columnist Javier Blas, the country's import dependency ratios are alarming: it buys overseas 99.9% of the oil it needs, 99.7% of coal, and 97.8% of natural gas.

In response to recent energy shocks, Tokyo has reassessed its supply sources, making it a bellwether for global trends. The direction it's signaling this time? A move away from the Middle East, with South Korea and India also eyeing diversification.

Japan buys 99.9% of its oil from overseas, mostly from the Middle East. However, the US has become the country's largest oil supplier, accounting for 37% of total petroleum imports in July. Mexico and Latin America provided another 3%.

To achieve this goal, Japan aims to diversify procurement sources and transport routes. The government is discussing a plan to finance pipelines that bypass the Strait of Hormuz, allowing it to continue buying crude from countries like the UAE and Saudi Arabia without relying on Iran.