Japan's Trade Deficit Doubles to $17.8 Billion Driven by Hormuz Crisis
Japan recorded a trade deficit of $17.8 billion between April and September, as the Hormuz crisis pushed energy import values up by 20.4% despite falling volumes.
Japan recorded a trade deficit of $17.8 billion, equivalent to 2.82 trillion yen, between April and September, nearly double the deficit recorded a year earlier, according to preliminary Ministry of Finance data for the first half of fiscal year 2026. Export value rose 18.4%, while import value jumped 20.4% to a record high.
Despite a 21.2% decline in oil import volume, its value rose 26.3%, and petroleum product import volume dropped 26.8% compared to a 23.2% value increase. Liquefied natural gas (LNG) import volume decreased 8.4% compared to the same period last year, but its value rose 13.5%, reflecting the surge in oil and gas prices in the six months ending in September.
The sharp increase in the energy bill followed the closure of the Strait of Hormuz, the main pathway for Japan's imports prior to the war, alongside rising crude prices, shipping, and insurance costs. Japan used to rely on the Middle East for more than 90% of its crude oil imports, prompting it to search for alternative sources and release its strategic reserves as part of an international effort led by the International Energy Agency to release 400 million barrels of oil and petroleum products. It also reduced gas-powered electricity generation in favor of coal this summer as LNG prices remained high.
September marks the fifth consecutive month in which Japan has registered a trade deficit. This month, the government passed three bills to diversify oil supplies and bolster energy security, including grants to compensate oil importers for higher shipping costs when purchasing from outside the Middle East.
What do these terms mean?
Trade Deficit: The amount by which a country's payments for imported goods exceed what it earns from exporting them.
Liquefied Natural Gas (LNG): Gas that is cooled to a liquid state for transport in specialized tankers, then re-gasified for use.
Strategic Reserve: A stockpile of oil held by a nation for use during supply disruptions or price spikes.
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