(March 2): Japanese Prime Minister Sanae Takaichi condemned Iran’s nuclear programme in a carefully worded response that avoided commenting on whether Tokyo supported Washington’s strike on Tehran.
“We are working closely with the relevant countries and responding as necessary, including by gathering information on the situation,” Takaichi said Monday (March 2). “Our consistent stance has been that the development of nuclear weapons by Iran must not be allowed.”
She reiterated that Japan has been supportive of US-Iran talks on the nuclear issue, adding that Iran must stop activities that bring instability to the region.
The prime minister’s comments point to the difficulty of showing support for its key security ally without directly backing a move to eliminate a nation’s sovereign leadership.
Japan is also highly dependent on Middle Eastern oil, further complicating the government’s messaging. In addition to the implications for political and security stability, conflict in the region may hit crude supplies, inflating prices and impacting Japan’s economy.
Shunichi Suzuki, the secretary-general of the ruling Liberal Democratic Party, urged caution against making hasty assessments of the situation in a live TV broadcast Sunday.
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“There is a long historical background leading up to this point and there is also Iran’s stance on the development of nuclear weapons,” he said. “I don’t think we can make a sweeping condemnation of the matter based on one incident.”
Still, higher energy prices will likely hit Japan hard, given the resource-poor nation’s reliance on the Middle East to meet its needs.
Oil surged on Monday by the most in four years before paring some gains, as the conflict risked disruption to global energy supplies through the Strait of Hormuz — a conduit for a fifth of the world’s oil as well as large volumes of gas, making it a crucial chokepoint.
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Japan’s reliance on Middle Eastern oil has hovered around 90%, hitting 95.1% in January, according to Japan’s Economy Ministry. Much of that oil makes its way to Japan through the Strait of Hormuz.
Japan has an oil stockpile that is expected to last about 254 days, according to the Economy Ministry.
The country’s chief cabinet secretary, Minoru Kihara, said at a media conference on Monday that there is no immediate plan to release strategic oil reserves.
Takahide Kiuchi, an economist at the Nomura Research Institute, estimated that instability in Iran could shave 0.18 percentage points off Japan’s economic growth while pumping up inflation by 0.31 points in a baseline scenario in which Iran doesn’t completely close off the Strait of Hormuz, but supplies are disrupted over a prolonged period.
The scenario is based on the assumption that oil prices rise to US$87 a barrel. Brent rose as high as US$82 a barrel, the highest in more than a year, after the US strike but has pared most of those gains.
Suzuki, the secretary-general of the LDP, said that the average Japanese household would likely feel some economic impact from the Iran situation.
“The question of what happens to energy, crude, LNG, and the Strait of Hormuz is one that has a huge impact on the Japanese economy. It will have a big impact on the people’s day-to-day lives,” he said, adding that the party will closely monitor the situation.
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Meanwhile, Japan’s major oil refiners said they did not expect any immediate impact on crude supplies to the country. A spokesperson for Idemitsu Kosan Co said the company had no need to shift its supply source to other regions, such as the US.
Cosmo Energy Holdings Co is closely monitoring the situation, a spokesperson for the company said, but does not expect an immediate supply shortage, citing domestic stockpiles and national reserves as well as tankers currently en route to Japan.
The two companies, as well as a third refiner, Eneos Holdings Inc, said on Monday that all of their employees in the Middle East are safe. Idemitsu plans to return its employees’ families to Japan when regional airports reopen, the spokesperson said.
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