- 14 Mar 2002
- 21,057
- 18,914
U.S. and Israeli strikes on Iran risk denting Japan's economy, as a jump in crude prices could drive inflation beyond the Bank of Japan's target and complicate the government's push for sustained gains in real wages. Japan sources more than 90% of its crude from the Middle East. Most shipments pass through the Strait of Hormuz, the narrow waterway off Iran's southern coast that handles a large share of global energy flows. A prolonged, de facto closure of the strait would carry heavy consequences and could send oil prices sharply higher.
Crude rose about 20% around the time of U.S. strikes on Iran in June last year. Hideo Kumano of the Dai-ichi Life Research Institute said prices could climb as much as 35% this time, reaching roughly $90 a barrel. At that level, he said, the impact would feed into petrol and electricity bills. If the attacks persist, the pressure could spread more widely through consumer prices.
Iran's Revolutionary Guard Corps reportedly attacked U.S. and British oil tankers in the Persian Gulf on Sunday and has effectively shut the Strait of Hormuz. If the situation escalates to the laying of sea mines, minesweeping by Japan's Maritime Self-Defence Force would become a practical consideration.
Dispatching minesweepers to the strait would require the government to declare a situation that threatens Japan's survival. The law sets no fixed criteria. Decisions are made on a case-by-case basis. Tokyo is cautious about taking that step. PM Takaichi told the lower house lawmakers that the government is gathering information. She said Japan holds oil reserves equivalent to 254 days of consumption.
Paywall alert:
Crude rose about 20% around the time of U.S. strikes on Iran in June last year. Hideo Kumano of the Dai-ichi Life Research Institute said prices could climb as much as 35% this time, reaching roughly $90 a barrel. At that level, he said, the impact would feed into petrol and electricity bills. If the attacks persist, the pressure could spread more widely through consumer prices.
Iran's Revolutionary Guard Corps reportedly attacked U.S. and British oil tankers in the Persian Gulf on Sunday and has effectively shut the Strait of Hormuz. If the situation escalates to the laying of sea mines, minesweeping by Japan's Maritime Self-Defence Force would become a practical consideration.
Dispatching minesweepers to the strait would require the government to declare a situation that threatens Japan's survival. The law sets no fixed criteria. Decisions are made on a case-by-case basis. Tokyo is cautious about taking that step. PM Takaichi told the lower house lawmakers that the government is gathering information. She said Japan holds oil reserves equivalent to 254 days of consumption.
Paywall alert:
Iran conflict may hit pause on Japan's economic recovery as crude oil soars
Prolonged war could push up inflation and drag down real wages
Japan says Iran's Strait of Hormuz closure not yet 'survival-threatening'
Minesweeping in oil-shipping artery would require grounds for collective self-defense