Soaring LNG Prices: Urgent Measures Should be Taken to Ensure Stable Procurement

Editorial

14:30 JST, March 18, 2026

Prices of liquefied natural gas as well crude oil are soaring as the situation in Iran is becoming increasingly tense. Japan should urgently take measures to ensure that the stable supply of electricity, which underpins the public’s daily lives, will not be shaken.

Iran has effectively blocked the Strait of Hormuz, putting the stable supply of crude oil and LNG at risk.

For Japan, the measures necessary to deal with crude oil and LNG are different.

More than 90% of Japan’s crude oil supply passes through the Strait of Hormuz, making the country extremely dependent on the Middle East. Crude oil is used for gasoline and plastic products, among other purposes. Oil-fired power generation accounts for less than 10% of domestic electricity production.

On March 16, the government took swift action by beginning to release the private-sector portion of its oil reserves, which amount to 254 days’ worth of supply. It should ensure that measures against soaring crude oil prices are not taken too late.

On the other hand, LNG is essential for Japan’s power supply. While about 60% is used for thermal power generation, about 40% is for city gas. As it is cooled to minus 162 C to be liquefied, it is difficult to store. Reserves in the private sector are said to amount to about three weeks’ worth.

From the perspective of strengthening energy security, Japan has been working to diversify the procurement sources for its LNG. About 40% comes from Australia, and even Qatar — the largest supplier for Japan in the Middle East — accounts for just over 5%.

Japanese power and gas companies procure LNG primarily through long-term contracts spanning several decades. This allows them to mitigate the impact of short-term price fluctuations to some extent.

Even so, it is difficult for Japan to escape the adverse effects of soaring prices.

Facilities in Qatar, which accounts for 20% of the world’s LNG supply, were damaged by Iranian attacks and have halted production.

Due to concerns over worsening supply, spot prices for LNG in Asia temporarily rose to more than double their pre-conflict levels.

If the blockade of the Strait of Hormuz persists, competition for LNG with European and Asian nations will arise, and a sharp increase in Japan’s electricity rates will be unavoidable.

Access to electricity at stable prices is the foundation of people’s daily lives. A situation that threatens their livelihoods must not be created. The government should actively urge LNG-producing countries, such as Australia and the United States, to increase production.

LNG procurement sources vary by power and gas company. Every possible effort should also be made to ensure the sharing of information regarding fuel reserves and mutual supply arrangements among operators.

Electricity demand will increase as the summer approaches. Aren’t there any coal-fired power plants, which have been idled due to aging or other reasons, that could be operated? It is hoped that the government will consider this matter as soon as possible. It is also necessary to take thorough measures to prevent accidents in thermal power generation. Steadily proceeding with the restart of nuclear reactors is also crucial.

(From The Yomiuri Shimbun, March 18, 2026)