Japan's Oil Dependency Has Halved Since 1973 But LNG Now Bears the Hormuz Risk
Japan's 2025 Energy White Paper shows oil fell to 35.7% of primary supply in FY2023, but LNG imports now carry their own Hormuz exposure.
Japan's oil share of primary energy supply fell to 35.7% in fiscal year 2023 from 75.5% at the time of the 1973 oil shock, according to the country's 2025 Energy White Paper, as cited in analysis published Wednesday (2026-09-23). That is barely half the 1973 level. LNG has picked up most of the slack, rising from 1.6% of primary energy in fiscal year 1973 to 20.6% in fiscal year 2023. Nuclear, which stood at 0.6% in fiscal year 1973, reached only 4.1% by fiscal year 2023.3
ICE Brent crude front-month was at $105.32/bbl on September 24. In its May Short-Term Energy Outlook, the EIA assessed that Iraq, Saudi Arabia, Kuwait, the UAE, Qatar, and Bahrain collectively shut in 10.5 million barrels per day in April. The agency projected global inventories would draw by 2.6 million barrels per day across 2026, assuming a later-than-expected Hormuz reopening, and revised OPEC spare capacity down to an average 2.5 million barrels per day in 2027, from a prior estimate of 3.8 million barrels per day.2
The shift away from crude since the 1970s was deliberate. After the first oil shock, Tokyo redirected power generation toward coal, gas, and eventually nuclear. By fiscal year 2010, oil had fallen to 40.3% of primary supply, with coal at 22.7%, LNG at 18.2%, and nuclear at 11.2%, per the note.com analysis published Wednesday (2026-09-23). LNG's climb from 1.6% to 18.2% in roughly 37 years reshaped Japan's long-term contract portfolio and domestic refining structure.3
But diversification did not mean decoupling from the Middle East. Roughly 90% of Japan's crude is still sourced from that region, according to OilPrice.com, and Tokyo has released around 80 million barrels from strategic petroleum reserves since the Hormuz closure — equivalent to approximately 26 days of domestic oil demand. Domestic refining covers nearly all gasoline demand and around 95% of diesel.1
LNG is more geographically spread, but with limits. Japan imported 66.3 million tonnes in 2025, down 1.5% year-on-year, with Australia supplying 26 million tonnes, Malaysia 10 million tonnes, and Russia 5.8 million tonnes through the Sakhalin-II sanctions exemption, per OilPrice.com. Around 6% of that supply, the Qatar and UAE volumes, transits the Strait of Hormuz. With 98% of domestic gas demand dependent on LNG imports, even a modest disruption to Gulf deliveries removes a buffer that does not exist onshore.1
JKM, the Asian LNG benchmark, was at $25.72/MMBtu on September 24. Overall LNG consumption in Japan has been declining in recent years, dragged by slower economic growth, renewables expansion, and the gradual restart of nuclear power, per OilPrice.com. Lower demand softens the worst-case supply surge scenario. But it does not address supply-side vulnerability for a country sourcing virtually all its gas from abroad.1
Within Japan's power mix, natural gas accounts for roughly 32% of generation, against 28% for coal, 9% for nuclear, and 7% for oil-fired plant, per OilPrice.com. The power sector absorbs 55 to 65% of total gas consumption, making it the dominant swing factor in demand management.1
Coal has absorbed some of the generation shortfall, with OilPrice.com reporting Japan as a key driver of the recent thermal coal rally. Newcastle coal was at $137.25 per tonne on September 24. Australian exports, already the largest single source of Japan's LNG supply at 26 million tonnes in 2025, are being pushed higher across both fuels at once.1
US LNG expansion provides some longer-term cushion. Export capacity grew by 0.9 billion cubic feet per day in April, led by Golden Pass LNG Train 1's first shipment and additional Corpus Christi Stage 3 output, per the EIA. US marketed natural gas production averaged 120.2 billion cubic feet per day in the first quarter of 2026, up 4% from the first quarter of 2025. Atlantic basin cargoes take weeks to redirect to Asian spot markets, and Japan's near-term procurement costs track the pace of Middle East production recovery more closely than incremental US supply additions. The EIA's 2.6 million barrel per day annual inventory draw forecast for 2026 rests on a Hormuz reopening timeline the agency has already revised once.2