Hormuz crisis has forced Japan into rethinking – and domesticating – its energy security needs

A liquefied natural gas tanker moored in Kawasaki, Japan, on April 8, 2026. Yuichi Yamazaki/AFP via Getty Images

Japan's Foreign Minister Motegi Toshimitsu phoned his Iranian counterpart, Abbas Araghchi, on Sept. 8, 2026, to express concern over the de facto closure of the Strait of Hormuz. It was reportedly the ninth such phone call between the pair since March.

Tokyo's urgency over the crucial waterway is understandable. While the economic ripples over the Strait of Hormuz crisis has been felt across the world, Japan is one of the countries feeling the pain most acutely.

Prior to the U.S. and Israeli strikes on Iran – and Tehran's retaliation and closure of the strait – Hormuz carried 93% of Japan's crude imports; the Middle East as a whole supplied 94% of the nation's oil.

Stockpiles and domestic refining capacity have cushioned the shock, but the crisis has exposed a deeper vulnerability: Japan has long depended on a maritime security environment it does not control.

But that may not always be the case. Japan has responded to the Strait of Hormuz crisis with an energy-security package that goes beyond securing alternative oil supplies. As a whole, the measures signal that Tokyo is looking to take greater responsibility for protecting the sea-lanes on which its energy security depends. In the process, it could make Japan a more capable – yet more autonomous – security partner for Washington.

Powerr-ing up

Over the summer, Prime Minister Sanae Takaichi's government unveiled POWERR GX, or the Policy Package for Wide Energy and Resources Resilience through Green Transformation.

The package seeks to diversify crude oil and supplies of naphtha – a key petrochemical feedstock – by strengthening reserves, supporting alternative transport routes, securing shipping insurance and expanding nuclear power.

POWERR GX reflects a broader shift in Japan's approach to both external energy security and domestic energy resilience. While Japan remains anchored to its U.S. alliance, it is also building greater national capacity to manage strategic risk.

Alongside greater energy independence, Tokyo is developing financial, logistical and diplomatic tools that give it more room to respond when Washington cannot guarantee the security conditions on which Japanese economic activity depends.

Building an insurance policy

The clearest evidence of this shift is insurance.

Within days of the initial U.S.-Israeli strikes against Iran in late February, underwriters invoked 72-hour cancellation provisions for affected war-risk coverage. This meant that ships operating in or near the affected waters could quickly lose insurance coverage, raising the cost and uncertainty of transporting energy supplies through the region.

The episode showed how quickly a choke point can become commercially unusable once insurance costs rise or coverage contracts. Military threats alone become an economic constraint even without the de facto blockades that Iran subsequently instituted.

Tokyo's proposed response is a state reinsurance mechanism that would help keep Japanese shipping covered when private markets retreat. In short, the government would assume part of the risk that private insurers are unwilling or unable to cover, allowing Japanese vessels to maintain conflict-risk insurance and continue operating in the region.

The idea has historical precedent.

The United Kingdom confronted a similar problem during World War I, when private insurers struggled to carry war risk at scale. The British state eventually became the reinsurer of last resort, formalized in the War Risks Insurance Act of 1939. Japan is reaching a comparable conclusion: When war risk exceeds what private capital will carry, the state can absorb part of the exposure.

Resilience, not independence

The insurance mechanism put in place to counter the impact of the Strait of Hormuz crisis sits within a wider package that Japan's Ministry of Economy, Trade and Industry has been developing since late July.

Japanese refiners and trading houses would contribute to a fund administered through the Japan Organization for Metals and Energy Security, helping cover the added freight and insurance costs of importing crude and naphtha along routes that avoid Hormuz, including pipelines through Saudi Arabia and the United Arab Emirates and longer maritime routes around the Cape of Good Hope.

The arrangement would spread part of the cost of diversification across the industry.

The government is also working to restore national crude reserves to the International Energy Agency's 90-day standard during fiscal year 2026–27, while targeting a 90-day level that also accounts for domestically refined naphtha in fiscal year 2027–28.

The Hormuz crisis has exposed a particular vulnerability in naphtha, whose shortage forced some of Japan's manufacturers to suspend sales or simplify packaging to conserve naphtha-derived printing inks.

Tokyo is also considering domestic stockpiles of U.S.-sourced crude and a dedicated naphtha reserve.

At the same time as building up domestic reserves, Japan is also helping Arab Gulf producers reduce their exposure to Hormuz. Saudi Arabia and the UAE have asked Japan to help finance pipeline expansions that could move crude to export terminals without transiting the strait. The Japan Organization for Metals and Energy Security mandate is being widened to support this kind of overseas infrastructure investment.

These measures strengthen resilience for Japan without creating independence. Saudi Arabia's east-west pipeline and the UAE's Habshan-to-Fujairah corridor can bypass Hormuz, yet even expanded capacity would cover only a fraction of the roughly 20 million barrels a day that normally transit the strait. Abu Dhabi's project is targeted at doubling its capacity to 3.6 million barrels a day by mid-2027. The Fujairah terminal anchoring the UAE's pipeline has also come under attack during the current conflict.

Japan is therefore financing ways to bypass the choke point while retaining substantial exposure to it. Tokyo has paired this hedging with direct diplomacy aimed at keeping regional shipping routes open.

The long-term fix has a longer timeline

Meanwhile, a nuclear component of POWERR GX looks to further ween Japan off Middle East oil. The Ministry of Economy, Trade and Industry's proposal to add up to 14 reactors by the 2050s would reshape Japan's energy mix.

But it offers little relief during a live crisis. Japan currently has 12 of its 33 operable reactors online, while the nuclear fuel cycle continues to face storage and disposal constraints as well as opposition from a public still scarred by the memory of the Fukushima nuclear accident of 2011.

The restart of Kashiwazaki-Kariwa, the world's largest nuclear power plant, drew several hundred protesters outside the Niigata prefectural assembly in December 2025 after years of local negotiations.

But it's still a long-term solution: Stockpiles and insurance can build resilience within months; nuclear power needs decades.

Risks, resiliency and strategic autonomy

South Korea offers a useful comparison when looking at Japan's recent efforts to reshape its oil industry. Seoul sources roughly 70% of its crude and about a fifth of its liquefied natural gas from the Middle East. Its response to the Hormuz closure has included a five-month ban on naphtha exports to preserve domestic supply.

One analysis frames Seoul's predicament as an "ally's paradox," arguing that its U.S. alliance can constrain diplomatic room for maneuver, including its ability to secure from Iran the kind of transit exemptions Beijing obtained.

To avoid Seoul's predicament, Japan plans to share costs, set savings goals, cover major financial risks and heavily back overseas construction.

The larger question concerns the strategic effects of Japan's energy shift. Japan's stockpile system has shown that it can cushion a severe disruption for a time. More consequential is Tokyo's willingness to build sovereign capacity in areas once left largely to markets, partners and the broader U.S.-led security order.

A state-backed reinsurance scheme, direct financing of Gulf pipeline infrastructure, strategic reserves and a project to stockpile American crude on Japanese soil point to a more capable Japanese state.

Together they form a parallel risk-management architecture, financed and controlled by Japan and running alongside rather than through the alliance with the U.S.

John Calabrese does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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