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Japan Considers Backing Pipelines to Bypass Hormuz to Diversify Energy Supply Routes

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Japan is considering supporting the construction of alternative pipelines that boost energy flows through the non-Strait of Hormuz routes as part of a strategy to strengthen its energy supply security.

Maritime traffic through the crucial waterway, which accounts of almost one-fifth of global energy flows, has been severely disrupted since the beginning of the Iran war in late-February, resulting in a global energy supply crunch.

Rising supply risks from the Middle East are causing disruptions in crude oil and products such as naphtha, as energy commodities become increasingly used as strategic and diplomatic tools, making existing measures insufficient to address new risks, according to the translated version of a document shared by Japan's Cabinet Office on Wednesday.

About 90% of crude oil passing through the Strait of Hormuz is headed toward Asia and the recent developments in the Middle East developments have significantly affected energy supplies and supply chains across Asian countries, including Japan, the document said.

To strengthen its energy resilience, Japan needs to improve the stability of overseas fossil fuel supplies in the short term and accelerate measures supporting the adoption of nuclear power and domestic renewable energy in the medium term.

"Furthermore, as supply chains become increasingly globalized, it is difficult for Japan alone to address these two challenges, and it is necessary to cooperate with countries, including those in Asia and the Middle East, to promote global resilience," the document added.

On Tuesday, Minister of Economy, Trade and Industry Ryosei Akazawa said that Japan has decided to not release any crude oil from its national reserve stockpiles in September or October.

In September, crude oil tankers originally scheduled to pass through the Bab-el-Mandeb Strait are being rerouted due to heightened tensions in the Middle East and will travel via the Suez Canal or around the Cape of Good Hope.

From October onwards, Japan expects the rerouting to be completed, with clearer schedules for shipments traveling through the Suez route. As a result, the country expects to return to 100% of planned crude oil supplies in October, similar to August, Akazawa said.

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