Japanese Govt, Oil Firms Rush to Diversify Crude Sources Amid Iran Crisis

By Masaomi Shimosato and Miho Naganuma / Yomiuri Shimbun Staff Writers

2:00 JST, March 30, 2026

Amid growing uncertainty surrounding the situation in Iran, the government and the oil industry are stepping up efforts to diversify their sources of crude oil procurement.

Yet, securing alternative suppliers is not an easy task due to rising transportation and refining costs among other factors.

Concerns over prolonged crisis

At a regular press conference on March 23, Shunichi Kito, president of the Petroleum Association of Japan and chairman of Idemitsu Kosan Co., voiced his surprise at the de facto blockade of the Strait of Hormuz, saying, “I had not envisioned Iran taking action to alienate the entire world.”

Kito stressed that this “should be an opportunity for us to work toward diversifying [procurement sources].”

Concerns are mounting that the blockade could be prolonged. Energy giants and other companies have begun moves to procure crude oil from regions outside the Middle East as well.

Inpex Corp., a government-backed major resource developer, is also exploring the possibility of stable supplies, mainly from Australia, Kazakhstan and Azerbaijan, where it holds interests.

Alaska, Red Sea routes

During a meeting with U.S. President Donald Trump on March 19, Prime Minister Sanae Takaichi proposed a joint Japan-U.S. effort to boost production of U.S. crude oil. With eye toward developing Alaskan oil fields, the two nations are considering a plan for Japan to source the increased output from Alaska and for both countries to jointly stockpile in Japan.

Shipping crude oil from Alaska to Japan takes an estimated two weeks — a week faster than shipments from the Middle East. The route also offers the benefit of avoiding high-risk areas such as the Strait of Hormuz.

However, market observers estimate any boost in production would take at least six to 10 years, which would fail to provide a timely solution to the ongoing supply crisis.

Another option is to transport Middle Eastern crude oil via the Red Sea, bypassing the Strait of Hormuz. However, pipeline capacity acts as a bottleneck, restricting the amount that can be moved.

The Red Sea region is also considered hazardous, as it serves as an operational base for Yemen’s pro-Iranian Houthi militants.

Differing components

Given past shipments from the regions and their potential capacity to increase production, crude oil from Central Asia and South America is also seen as a promising alternative.

A senior official at the Economy, Trade and Industry Ministry said the government is reaching out to countries including Venezuela, a former crude oil supplier to Japan until 2017.

However, the components contained in crude oil vary depending on the production area, and most domestic refineries have equipment tailored to medium crude from the Middle East.

As Venezuelan oil is heavy crude, refining it in Japan would require new capital investment.

While Japan has a history of importing oil from Kazakhstan, stable procurement faces hurdles as most of the supply must pass through Russian territory.

Competition to secure crude oil is intensifying due to global supply concerns, making it difficult to procure from any region.

“It’s difficult for the private sector alone to find incentives to shift away from the Middle East,” said Noriaki Oba, president of the Post-oil Strategy Institute. “In addition to diplomacy, the government should introduce strategic measures such as subsidies to bridge the cost gap.”