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Japan to announce oil import diversification plan tied to Middle East pipelines

The plan is expected to reduce reliance on Middle East crude and shift more costs to energy companies, as Japan’s monthly import bill hit a record $76.4 billion last month.

Reported · Written up by our desk · Energy

Japan is set to announce an energy import diversification plan aimed at cutting the country’s reliance on Middle East oil and gas. The approach includes provisions on support for pipelines in the region designed to divert export oil flows away from the Strait of Hormuz, according to Japanese media cited by OilPrice.

The government also plans to require energy companies to share the higher costs of importing crude from suppliers outside the Middle East. Before the U.S.-Israeli war with Iran began, Japan relied on the Middle East for almost all of its crude imports, which are critical for the resource-poor country.

After the conflict, Japan sought alternative suppliers including the United States, Canada, African oil producers, and Azerbaijan. The diversification has been expensive, with Japan’s total import bill reaching an all-time high of $76.39 billion last month, reflecting higher international oil prices.

Japan is also a major LNG importer and earlier this summer reduced gas-fired electricity generation in favor of coal as LNG prices remained elevated. OilPrice reports Japan has been burning more coal and using less gas since the Middle East war started.

Latest closeWTI crude $82.40 ▲1.4%

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