Strait of Hormuz Closure Shakes Markets; Prolonged Closure Could Deal Heavy Blow to Japanese Economy

The Yomiuri Shimbun

14:38 JST, March 3, 2026

Financial markets were shaken at the start of the week following the U.S. and Israeli attacks on Iran. Crude oil prices surged as the Strait of Hormuz, a vital maritime shipping route, was effectively blocked, heightening the risk of disrupted supplies from the Middle East.

In Japan, the situation could reignite inflation, which had been showing signs of slowing down, and a prolonged closure could deal a major blow to the Japanese economy.

“If [the price surge] continues, it will impact fuel costs,” said Yuji Saito, executive vice president of Japan Airlines Co., at a press conference on Monday. “We hope for a resolution as soon as possible.”

There is currently no mechanism to pass on fuel price fluctuations to domestic flight fares, so a direct consequence of rising fuel prices would be a drop in profit for airline operators.

In addition, many airports in the Middle East are hubs for connecting flights to Europe and Africa, so a decline in passenger numbers is another cause for concern.

90% dependence

Japan imports nearly all its fossil fuels from overseas, relying on the Middle East for over 90% of its crude oil and over 10% of its liquefied natural gas.

Production areas are concentrated around the Persian Gulf, which includes the United Arab Emirates, Saudi Arabia and Kuwait. The majority of giant tankers bound for Japan pass through the Strait of Hormuz, making the waterway a vital artery for Japan.

Although alternative export routes exist, such as one via Saudi Arabia’s pipelines on the Red Sea side, they are limited. If a blockade of the Strait of Hormuz, which accommodates a large amount of traffic, were to persist for a prolonged period, widespread impacts would be unavoidable.

As of December 2025, the public and private sectors in Japan had about 254 days’ worth of crude oil reserves, or about eight months.

A major Japanese energy company said there would be no immediate impact on the distribution of petroleum products. However, rising crude oil prices would ripple through a wide range of sectors, affecting gasoline prices, electricity bills and logistics expenses. Since gasoline and kerosene are also used in the agricultural and fisheries industries, such rises would also lead to higher food prices.

GDP could drop

According to estimates by Nomura Research Institute, Ltd., if crude oil prices were to rise to around $140 per barrel — their peak before the 2008 global financial crisis triggered by the collapse U.S. investment bank Lehman Brothers — Japan’s gross domestic product would fall by 0.65% annually, and inflation would rise by around 1.14% annually.

In a worst-case scenario, gasoline prices could surge to around ¥320 per liter.

The government has implemented measures to counter rising prices, such as subsidizing electricity and gas bills and abolishing the provisional gasoline tax surcharge.

Tomomichi Akuta of Mitsubishi UFJ Research and Consulting Co. pointed out that “the negative impacts could offset the government’s countermeasures.”