Japan to Unveil New Oil Diversification Strategy

Japan to Unveil New Oil Diversification Strategy

Wed, August 26, 2026 at 11:30 AM GMT+3 2 min read

Japan is today set to announce an energy import diversification plan that will include stipulations about support for pipelines in the Middle East aimed at diverting export oil flows away from the Strait of Hormuz.

The plan also features a push to reduce the country's reliance on oil and gas overall, and also reduce its reliance on Middle Eastern oil and gas specifically, Reuters has reported, citing Japanese media. The government also plans to make energy companies share the higher costs of importing crude from places other than the Middle East.

Before the U.S.-Israeli war with Iran broke out, Japan relied on the Middle East for almost all of its crude oil imports, which are vital for the resource-poor country. After the war, the Japanese government rushed to secure alternative suppliers. These include the United States, Canada, African oil producers, and Azerbaijan.

This diversification has carried a hefty price tag, however. Last month, Japan's total import bill hit an all-time high of $76.39 billion because of higher international oil prices. That monthly import figure beat the previous record set a month earlier, suggesting this month's import bill could be record-breaking as well.

Japan is also one of the world's biggest LNG importers, and earlier this summer reduced gas-fired generation in favor of coal as the price of liquefied natural gas remained elevated. Japan has been burning more coal and less gas for power generation since the war in the Middle East started, and it is not the only one. Many Asian countries have been forced to make the switch from gas to coal on affordability and availability grounds.

In addition to all this, Japan, like others, made several crude oil releases from strategic storage to weather the impact of the war on its energy security and economy. This, however, has left strategic reserves depleted and in need of replenishment, which will be problematic as the Middle East crisis continues.

By Irina Slav for Oilprice.com

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