Oil prices 2026: the cost for Japanese households.

Japan's existential oil dependency

Japan has no meaningful domestic oil production and imports 99% of its crude -- approximately 91% of which comes from the Middle East, with Saudi Arabia, UAE and Kuwait as the top three suppliers. The Strait of Hormuz is therefore not an abstract geopolitical concern for Japan; it is the single most critical chokepoint in the country's energy supply chain. A full Hormuz closure would hit Japan harder than almost any other developed economy.

Fuel subsidy and government response

Japan has maintained a fuel subsidy programme (sekiyu kyufu kin) since January 2022 that caps retail petrol prices by subsidising the difference when prices exceed a threshold. The subsidy has cost the government over 10 trillion JPY since inception. In March 2026 the subsidy is being gradually reduced, meaning the full market impact is beginning to flow through to pump prices for the first time since 2022. This explains why Japanese petrol prices are rising faster than the crude increase alone would suggest.

Kerosene for home heating

Unlike most developed economies, Japan uses kerosene extensively for home heating -- particularly in Hokkaido and Tohoku. Kerosene (touyu) is sold in 18-litre drums at gas stations and home centres. At 106 JPY/L (March 2026), a Hokkaido household consuming 600L/winter pays approximately 63,600 JPY -- 16,000 JPY more than the 2024 baseline. This heating oil exposure is unique among G7 nations.

Cost breakdown by category