Gas, Electricity Bills May Spike amid Strait of Hormuz Closure

Tokyo, March 2 (Jiji Press)–With the Strait of Hormuz essentially shut down following the U.S.-Israeli strikes on Iran, concerns are rising in Japan over stable energy procurement. A prolonged closure of the strait, a critical chokepoint for crude oil transportation, may result in soaring gasoline prices and utility bills, which could have a devastating impact on households, thereby significantly denting the country’s gross domestic product. Japan relies on the United Arab Emirates, Saudi Arabia, Kuwait and Qatar for 93 pct of its crude oil imports. Preparing for supply disruptions, both the Japanese government and private-sector companies have accumulated oil stockpiles. Together, they had stocked up sufficient oil products to last 254 days as of the end of 2025, according to the Agency for Natural Resources and Energy. The Iran situation will “have no immediate impact on our oil supply,” an official of major oil wholesaler Idemitsu Kosan Co. said, stressing that the company has enough oil inventories to meet the needs in Japan for the time being. Concerns, however, are rising over a prolonged Strait of Hormuz closure. In off-hours trading Sunday, the benchmark U.S. crude oil futures contract briefly reached 75 dollars per barrel for the first time in about eight months. Takahide Kiuchi, executive economist at Nomura Research Institute Ltd., predicts that the crude oil futures could rise to 87 dollars if the military conflict drags on. Under such a scenario, Japan’s average price of regular gasoline per liter, which has fallen below 160 yen thanks to the abolition of the provisional gasoline tax surcharge at the end of last year, will likely shoot up to top 200 yen, Kiuchi said. The positive effect of the abolition of the surcharge would “evaporate,” he said. If overall energy prices, including those of liquefied natural gas, rise in tandem with crude oil prices, that would lead to higher transportation and manufacturing costs, and eventually to price hikes for food and many other items, putting major burdens on households and companies. In the worst case, in which the conflict escalates further and the key U.S. crude oil futures reach 130 dollars per barrel, Japan’s real GDP would be pushed down by 0.58 pct in the first year and by 0.96 pct in the second year, Takuya Hoshino, an economist at Dai-ichi Life Research Institute Inc., said. While real wages have been expected to start turning higher in Japan as food inflation is calming down, Hoshino warned that the size of drops in real wages may expand again if the Iran situation deteriorates further and energy prices surge as a result. END [Copyright The Jiji Press, Ltd.]