Middle East Crisis Seen Affecting Japan Trade Balance

Tokyo, April 23 (Jiji Press)–The impact of the ongoing Middle East crisis on Japan’s trade balance is expected to become visible in earnest in data for April onward. The country’s preliminary customs-cleared trade statistics for March, announced by the Finance Ministry on Wednesday, showed that the effect of a surge in crude oil prices reflecting the de facto blockade of the Strait of Hormuz was not large. It remains unclear, however, whether progress will be made in peace negotiations between the United States and Iran. An economist warns that Japan’s trade deficit, which shrank to some 1.7 trillion yen in fiscal 2025, may balloon to about 15 trillion yen in fiscal 2026 if the Strait of Hormuz, a key waterway for Middle East crude oil, remains closed for an extended period of time. In March, overall imports from the Middle East dropped 10.7 pct from a year before. Crude oil imports, which account for 80 pct of the total imports from the region, fell 5.6 pct to 706.5 billion yen. In volume terms, crude oil imports from the Middle East increased 4.5 pct to 10.45 million kiloliters, continuing to make up over 90 pct of Japan’s total crude imports. Meanwhile, Middle East-bound exports plunged 45.9 pct to 225.7 billion yen. Among major products, exports of automobiles tumbled 36.8 pct to 159.4 billion yen. By volume, vehicle shipments dropped a whopping 54.4 pct. Koya Miyamae of SMBC Nikko Securities Inc. said that the negative impact on trade volume would likely subside in the near future if the Strait of Hormuz is reopened at an early time. As it is expected to take time before crude oil prices fall back to levels before the Middle East crisis, which started in late February with U.S.-Israeli military operations against Iran, however, Japan’s trade deficit is seen totaling 5 trillion to 6 trillion yen in fiscal 2026 to March 2027, he said. If the blockade of the strait is prolonged, the fiscal 2026 trade deficit “is highly likely to top 10 trillion yen and may possibly reach a level around 15 trillion yen,” Miyamae cautioned. END [Copyright The Jiji Press, Ltd.]