This is Hamamoto from TIMEWELL. Today, stepping away from technology topics, I want to write about a geopolitical risk that could shake the very foundations of our lives and economy. The topic is the Hormuz Strait.
A name that appears occasionally in the news. But have you ever concretely imagined what impact it would have on our lives if that strait were blockaded? Entering 2026, the Middle East situation has once again intensified. Iran is exerting increasing pressure on the Hormuz Strait, and maritime navigation is beginning to be disrupted. This is no longer a distant problem. Surging gasoline prices, rising electricity bills, the approaching sound of recession — all are closely linked to developments in the Hormuz Strait.
This article starts with the basic question of what the Hormuz Strait is, clarifies its importance in the global energy transportation network (sea lanes), and then simulates — using concrete data — what impact a blockade of this strait would have on Japan's economy and our daily lives, in light of the latest situation.
What Is the Hormuz Strait? The World Economy's Lifeline and Most Critical Chokepoint
The Hormuz Strait is an approximately 160-kilometer strait connecting the Persian Gulf and the Gulf of Oman. Iran borders its northern shore, and the UAE and the Musandam Peninsula (an Omani exclave) border its southern shore. At its narrowest point, the width is only about 33 kilometers, and the navigable lanes for large tankers are each only about 3.2 kilometers wide — one for inbound and one for outbound traffic [^1].
This geographic characteristic is why the Hormuz Strait is called a "chokepoint" — a location that, in military or logistics terms, cannot be avoided due to its narrow passage, and whose blockade would have devastating consequences. The Hormuz Strait is the world's most important chokepoint for oil transportation.
Its importance is evident from the sheer volume of energy passing through it. According to the U.S. Energy Information Administration (EIA), approximately 20 million barrels of crude oil passed through this strait daily on average in 2024 [^2] — roughly 20% of global oil consumption. The International Energy Agency (IEA) notes that approximately 30% of the world's oil trade passes through the Hormuz Strait [^4].
It is not only crude oil. The strait is also a critical route for liquefied natural gas (LNG). In 2024, approximately 20% of global LNG trade passed through this strait [^5]. Qatar, one of the world's largest LNG exporters, depends almost entirely on the Hormuz Strait for its exports.
An enormous volume of energy-carrying tankers navigate this S-curved narrow passage, repeatedly adjusting course. This artery connects the major oil- and gas-producing nations of the Persian Gulf — Saudi Arabia, Iraq, Kuwait, the UAE, Iran, Qatar, and Bahrain — with consumers around the world.
The Hormuz Strait's Role in Sea Lanes — Why It Is Japan's Economic Lifeline
The Hormuz Strait, as a pivotal point in global energy transportation, is literally Japan's economic lifeline.
Surrounded by sea on all sides and possessing almost no useful domestic energy resources, Japan depends on imports for the vast majority of its energy needs. According to METI statistics, in 2025, a full 93.5% of Japan's crude oil imports (139.74 million kiloliters) came from the Middle East [^6]. By country, the UAE accounts for 42.3%, Saudi Arabia 39.8%, and Kuwait 6.0% — the top three countries alone account for nearly 90% of the total.
| Crude oil import source | Share (2025) |
|---|---|
| UAE | 42.3% |
| Saudi Arabia | 39.8% |
| Kuwait | 6.0% |
| United States | 4.3% |
| Other | 7.6% |
(Source: METI Agency for Natural Resources and Energy and JETRO [^6], compiled by TIMEWELL)
More than 80% of tankers transporting crude oil from these countries to Japan pass through the Hormuz Strait [^7]. This means approximately 74% of Japan's crude oil imports transit through this narrow passage. These numbers speak to how critically important stable navigation through the Hormuz Strait is to Japan's energy security.
A word on LNG as well. Japan's dependence on the Middle East for LNG imports is not as high as for crude oil. Middle Eastern LNG from Qatar and Oman accounts for roughly 10% of Japan's total imports [^9]. However, the issue lies in LNG's nature. LNG must be liquefied at minus 162 degrees Celsius for transport and is extremely difficult to stockpile in large quantities over extended periods, unlike oil. Even a slight disruption in supply immediately affects power generation and city gas supply.
The Hormuz Strait is Japan's greatest Achilles' heel in its energy supply network. If there is a problem with navigation through this strait, Japan's industrial activity and people's daily lives will take incalculable damage. That is precisely why the Japanese government has worked to secure this sea lane by deploying the Maritime Self-Defense Force and coordinating with the U.S.-led coalition of the willing.
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Escalating Middle East Tensions — Iran's Pressure and the Reality of a Blockade
Entering 2026, the Middle East situation deteriorated rapidly. The trigger was a direct attack by the United States and Israel on Iran, reported on February 28. Reports also circulated that Iran's Supreme Leader Khamenei had been killed in the attack, bringing tensions between the two countries to a sudden boiling point [^10].
In response, Iran's elite military organization — the Islamic Revolutionary Guard Corps (IRGC) — issued a radio warning on March 1 to vessels navigating near the Hormuz Strait: "No vessel is permitted to transit the Hormuz Strait." In response, major Japanese shipping companies NYK Line and Mitsui O.S.K. Lines instructed their vessels to avoid the Hormuz Strait. Iranian media reported that "the strait has effectively been closed" [^11].
Iran's Foreign Minister Araghchi moved quickly on the same day to say "there is no intention to blockade the strait" [^12], but the threat, once issued, was enough to send shockwaves through the global shipping and insurance industries. Without a formal blockade declaration, navigating in an environment where an attack could come at any moment is extremely difficult for tankers. This is what is called a "de facto blockade."
Looking back at history, this is not the first time Iran has used the threat of a Hormuz Strait blockade as leverage on the international community. During the Iran-Iraq War (1980–1988), both sides attacked each other's tankers in the Persian Gulf in what was called the "Tanker War," threatening navigation through the Hormuz Strait [^13]. In 2011–2012, Iran suggested a blockade in response to Western economic sanctions over suspected nuclear development. In 2019, in retaliation for the U.S. withdrawing from the Iran nuclear deal and reimposing sanctions, two tankers — including one belonging to a Japanese shipping company — were attacked in June, and in July the IRGC seized the British-flagged tanker Stena Impero [^14].
In this way, Iran has repeatedly used the Hormuz Strait as a card whenever geopolitical tensions rise. However, it has never actually moved to a complete blockade. The reason is that blockading the Hormuz Strait would be a double-edged sword that also strangles Iran's own economy.
Iran itself also depends heavily on the Hormuz Strait for its crude oil exports. While Iran has been working to secure alternative routes — including constructing a new export terminal at Jask Port on the Gulf of Oman — the transportation capacity is limited [^7]. A complete blockade would inevitably deal devastating damage to the Iranian economy as well.
For this reason, the prevailing view among experts is that "the probability of Iran undertaking a prolonged complete blockade is low" [^7]. However, the unprecedented situation of the supreme leader being killed makes the actions of hardliners within Iran completely unpredictable. Personally, I have never felt more reason to question the previous assumption that "there will be no blockade." Even if short-lived, or even if not a complete blockade, if the laying of mines or intermittent attacks on vessels makes navigation severely difficult, the impact would be no different from a complete blockade. A risk that, while low probability, would cause catastrophic damage if it occurred — a tail risk — is now weighing heavily on the global economy as a concrete possibility.
Three Scenarios for the Impact on Japan's Economy
If the Hormuz Strait were to be blockaded, or enter a de facto blockade state, what specific impacts would Japan's economy face? Let us examine in detail the impact projections based on three scenarios published by Nomura Research Institute (NRI) on March 2, 2026 [^7]. These projections were calculated using the Cabinet Office's "Short-term Japan Macroeconomic Model (2022 Edition)" and are highly credible.
The baseline crude oil price used is $67 per barrel (WTI — West Texas Intermediate), the price just before the military conflict intensified.
| Scenario | Assumed situation | Crude oil price (WTI) | Increase | Real GDP (1-year cumulative) | Prices (1-year cumulative) |
|---|---|---|---|---|---|
| Scenario 1: Optimistic | Military conflict is relatively limited, ending at a scale comparable to the "12-Day War" of June 2025 | $77/barrel | +14.9% | -0.09% | +0.16% |
| Scenario 2: Base | Military conflict intensifies and prolongs, causing significant disruption to oil transportation | $87/barrel | +29.9% | -0.18% | +0.31% |
| Scenario 3: Pessimistic | Conflict expands across the Middle East; first ever complete blockade continues for 1+ year | $140/barrel | +109.0% | -0.65% | +1.14% |
(Source: Nomura Research Institute, "Impact Projections for Crude Oil Price Rise Risk and Japan's Economy from Iran Attack" [^7], compiled by TIMEWELL)
Scenario 1: Military Conflict Is Relatively Limited
The most optimistic scenario. It assumes that the military conflict between the U.S./Israel and Iran concludes within a relatively short period — similar to the "12-Day War" of June 2025 — and the impact on Hormuz Strait navigation remains temporary. In this case, crude oil prices would rise to $77 per barrel — a 14.9% increase from the baseline.
Even at this level of crude oil price increase, Japan's real GDP is projected to be pushed down by 0.09% over a year, while consumer prices are pushed up by 0.16%. Even in a limited conflict, negative impacts on Japan's economy cannot be avoided.
Scenario 2: Military Conflict Intensifies and Prolongs
The base scenario, regarded as a more realistic threat. It assumes that the military conflict prolongs and significant, sustained disruption to vessel navigation through the Hormuz Strait occurs. Rather than an official blockade declaration by Iran, the image is an ongoing de facto blockade through intermittent attacks and intimidation.
Crude oil prices would rise to $87 per barrel — the high during the 2024 military conflict — an increase of 29.9%. The impact on Japan's economy becomes more severe: real GDP pushed down 0.18% over a year and prices pushed up 0.31%. The GDP downward effect is twice that of Scenario 1, and adverse economic impacts become clearly apparent.
Scenario 3: Complete Blockade of the Hormuz Strait
The worst-case scenario. Anti-U.S. and anti-Israel sentiment within Iran intensifies to an extreme, and Iran — for the first time — moves to completely blockade the Hormuz Strait even at the cost of its own economic damage. This blockade continues for an extended period of a year or more.
Crude oil prices would surge to $140 per barrel — equivalent to the all-time high recorded before the Lehman Brothers collapse in 2008 — an increase of a full 109.0% from the baseline. The damage to Japan's economy would be incalculable: real GDP pushed down 0.65% over a year while prices surge 1.14%. An economy in decline while only prices rise — this is the classic definition of stagflation, the most undesirable economic condition. The probability of Japan's economy falling into a severe recession becomes extremely high.
How Our Daily Lives Would Change — Gasoline, Electricity Bills, and the Kitchen Table
The NRI scenario analysis showed the impact on the macroeconomy as a whole, but the impact on daily life would be more concrete and direct. Crude oil price spikes are passed through to the prices of all goods and services with a time lag.
The fastest and most direct impact would be on gasoline prices. According to NRI projections, in Scenario 2 (crude oil rising to $87 per barrel), domestic gasoline prices would rise by approximately 30%, bringing the average price of regular gasoline nationwide to over 200 yen per liter [^7]. For people and industries where automobiles are indispensable — commuters, freight companies — this is a life-or-death matter. If crude oil surges to $140 in Scenario 3, the thought of how far gasoline prices would jump is daunting. Even if the government were to activate the trigger clause that temporarily reduces fuel taxes, it could prove to be too little, too late.
Rising crude oil prices also ripple through to LNG and coal prices used as fuel for thermal power generation. Thermal power still accounts for a large proportion of Japan's electricity generation mix, and increased fuel costs are directly reflected in electricity rates. NRI's analysis projects that even under Scenario 2 conditions, electricity and gas bills would rise more than 10% within six months to a year [^7]. Yomiuri Shimbun reporting noted the possibility that electricity and gas bills could more than double if the situation worsens [^15]. If this occurs during peak summer cooling or winter heating demand, the impact on household finances would be unavoidable.
Rising crude oil prices increase fuel costs for trucks, ships, and aircraft, driving up overall logistics costs. Logistics is the lifeblood of every industry, from food to daily necessities to industrial products. When those costs rise, producers and retailers have no choice but to pass the increase on to product prices. Not just energy-related prices such as gasoline, electricity, and gas — the prices of nearly everything in our daily lives, from vegetables and meat at the supermarket to clothing and home appliances, would rise. This is the substance of the "1.14% price increase" projected in Scenario 3.
The final blow to the Japanese economy would be the risk of "stagflation." Businesses, with profits squeezed by soaring raw material and energy costs, would become cautious about capital investment and wage increases. Consumers, with real incomes declining due to price increases, would tighten their spending. Both corporate production activity and individual consumption activity would cool, leading to an economic recession. Normally, when the economy worsens, demand decreases and prices fall. However, in this case, prices rise due to cost increases, creating a dangerous situation where economic recession and price increases proceed simultaneously [^7]. The Bank of Japan, caught between downside risks to the economy and upside risks to prices, would face an extremely difficult monetary policy challenge.
Are There Preparations and Alternatives? The Reality of Japan's Energy Security
What preparations does Japan have for the Hormuz Strait risk, which could cause such enormous damage? The short answer: short-term countermeasures have limitations, and resolving medium- and long-term challenges is indispensable.
Japan's greatest defense — its world-class oil reserves — is the maximum shield. As of end-December 2025, Japan holds a total of 254 days' worth of oil reserves [^6]: 146 days in government national reserves, 101 days in private-sector reserves (mandatory for companies), and 7 days in joint reserves with oil-producing countries. These 254 days of reserves mean that even if the Hormuz Strait were completely blockaded, Japan could maintain domestic oil supply for approximately eight months. A true trump card — buying precious time for the next moves: securing alternative procurement sources and diplomatic efforts to resolve the conflict.
However, reserves are ultimately a time-buying measure and are not a fundamental solution to the problem. If a blockade lasts more than eight months, Japan would face severe energy shortages. Releasing reserves can suppress market disruption, but cannot stop the crude oil price spike itself.
Alternative routes bypassing the Hormuz Strait do exist. Saudi Arabia has a pipeline that crosses the country to Yanbu Port on the Red Sea coast, and the UAE has a pipeline running to Fujairah Port on the Gulf of Oman [^16]. However, the transportation capacity of these pipelines is limited, and even combined they can cover only a portion of the volume that passes through the Hormuz Strait. In particular, countries like Iraq, Kuwait, and Qatar have virtually no effective alternative routes.
The ultimate solution is to reduce excessive dependence on specific regions and diversify energy sources themselves. Efforts to increase crude oil imports from U.S. shale oil and from outside the Middle East — Russia, Brazil, West Africa — are actually progressing. In fact, in 2025, crude oil imports from the United States increased 2.8 times from the previous year, and Middle East dependence declined marginally [^6]. However, considering volume, price, and transportation costs, completely replacing Middle Eastern crude oil is not realistic. Expanding renewable energy is also important, but there is still a long way to go before overcoming challenges of stable supply and costs and becoming the primary source of energy supply.
Geopolitical Risk and Corporate Export Control — Another Often-Overlooked Angle
Rising geopolitical risks like a Hormuz Strait blockade affect not only energy prices, but also companies' international transactions themselves.
When the Middle East situation intensifies, governments move to expand sanctions targets and tighten export controls. In fact, during past Iran sanctions episodes, Japanese companies were busy with counterparty screening and export classification. The assumption that "it's fine because this is a regular counterparty" can collapse overnight. That is the danger of geopolitical risk.
Particularly for manufacturers and trading companies with direct or indirect ties to the Middle East, the volume of work involved in verifying that counterparties are not on sanctions lists and that exported technology and products do not violate catch-all controls surges sharply in times of crisis.
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In Closing — The Future of the Hormuz Strait Is Japan's Future
How deeply and directly a single strait — the Hormuz Strait — is connected to Japan's economy and our daily lives.
This artery through which approximately 20–30% of the world's oil and LNG transportation passes. For Japan, which depends on the Middle East for more than 90% of its crude oil imports and transports the vast majority of that through the Hormuz Strait, this strait is literally a lifeline. Entering 2026, a military conflict between the U.S./Israel and Iran has confronted us with the reality of a de facto blockade threatening this lifeline. According to NRI projections, in the worst case, a complete blockade could push crude oil prices to $140 per barrel, cause Japan's real GDP to fall 0.65%, and create a risk of stagflation with prices rising 1.14%.
Gasoline exceeding 200 yen per liter. Electricity and gas bills soaring. The prices of everything rising. Our lives could become far harsher than they are today.
Japan has the trump card of 254 days of oil reserves, but it is not omnipotent. Resolving medium- and long-term challenges — securing alternative routes and diversifying energy sources — requires enormous time, cost, and national consensus.
The situation in the Hormuz Strait may at first glance seem like a distant country's affair. But its waves will certainly reach our feet — as a very large tsunami. Taking this issue as one's own, and having each person think about the future of energy and the future of Japan. That, I believe, is the first step to navigating this uncertain era.
References
[^1]: Nikkei, "What Is the Hormuz Strait? The Lifeline of Energy Supply" (June 15, 2019)
[^4]: International Energy Agency (IEA), "Strait of Hormuz — Factsheet"
[^5]: Asahi Shimbun Digital, "If Iran Blockades the Hormuz Strait, What Happens?" (June 24, 2025)
[^6]: JETRO, "The Hormuz Strait: A Key Logistics Hub for Resources and More" (February 26, 2026)
[^9]: Nikkei, "Japan's Three Shipping Companies Unable to Transit Hormuz Strait" (March 1, 2026)
[^13]: Asahi Shimbun Digital, "Past Cases Where Hormuz Strait Blockade Was a Concern" (June 24, 2025)
[^14]: BBC News Japan, "Iran Seizes British Tanker in Hormuz Strait" (July 20, 2019)
[^15]: Mainichi Shimbun, "Prolonged Hormuz Blockade Would Hit Household Finances Hard" (March 1, 2026)
[^16]: JETRO, "The Hormuz Strait: A Key Logistics Hub for Resources and More" (February 26, 2026)