Japan taps 80m barrels of reserves as Hormuz closure exposes gas dependence
Tokyo's emergency oil release steadies the fuel balance, but gas-fired power's 32% share and stalled nuclear restarts leave it vulnerable.
Japan has released around 80 million barrels from its strategic petroleum reserves, roughly 26 days of domestic oil demand, after the effective closure of the Strait of Hormuz cut the route for close to 90% of its crude imports.1 The draw is large enough to steady the immediate fuel balance, particularly since domestic refining covers nearly 100% of Japan's gasoline and around 95% of its diesel demand.1
The oil is the easy part. Japan's real exposure runs through gas, where roughly 98% of domestic demand is met by LNG imports and the power sector absorbs some 55-65% of total consumption.1 Natural gas supplies about 32% of power generation, ahead of coal at 28%, nuclear at 9% and oil-fired plants at 7%.1
In 2025 Japan imported 66.3 million tonnes of LNG, down 1.5% year-on-year, keeping its place as the world's second-largest buyer after China.1 Direct Gulf exposure is thin. Only about 6% of that supply transits the Strait of Hormuz, from Qatar and the UAE, with the bulk arriving from Australia at 26 million tonnes, Malaysia at 10 million tonnes and Russia at 5.8 million tonnes.1
The Russian volume comes via Sakhalin-II, where Japan retains a sanctions exemption and the Mitsui and Mitsubishi consortium holds equity.1 That gives Tokyo a line to Russian LNG most G-7 members lack, even as those same countries make cautious overtures to Moscow to help stabilise a market now in its third month of crisis.2 Any expansion of that relationship would carry political risk.2
Nuclear is the gap Tokyo cannot close quickly. At just 9% of generation it sits far below the government's target, leaving coal at 28% to shoulder more of the load than Japan's net-zero commitments comfortably allow.1 Every tonne of gas Japan cannot secure is a tonne of coal burn it may have to defend, and the seaborne market has noticed.
The near-term power signal is soft. Japan NRG's consensus read is bearish for Tokyo baseload, carrying seven negative signals and no bullish weight.3 Traders put the calm down to mild weather rather than any comfort in supply, and that reading would flip fast if a heatwave drove cooling demand beyond what the LNG chain can deliver.3
The reserve draw buys weeks, not a fix. It covers about 26 days of demand and assumes an orderly drawdown with no further shocks, while 90% of Japanese crude still passes through the world's most contested chokepoint.1 The next tell for traders will be whether Japanese utilities step up spot LNG buying, which would confirm that Tokyo is hedging against a disruption it expects to last.1