Hello, this is Hamamoto from TIMEWELL.
When I wrote the March piece, the de facto closure of the Strait of Hormuz still felt like "temporary disruption that could lift any day." Two months later, it is clearly settling into a long-haul phase. As of April 28, 2026, traffic through the Strait is down roughly 95% versus pre-conflict levels, and crude oil refuses to drop below $112 per barrel[^1][^6]. The U.S. and Iran have settled into a "double blockade" structure — extended ceasefires running alongside port closures and toll collection by the Revolutionary Guard Corps — and economists at NLI Research Institute now project the quarter to oscillate in the $90 to $100s with no clear breakout[^2].
This article works from that premise and focuses on what Japanese companies should be doing right now. I covered the macro impact scenarios in the previous article, so this time I want to narrow in on five operational areas: procurement, export controls, contracts, insurance, and hedging. METI announced a second tranche of national reserve releases on April 15, and on April 21 it amended the operational guidelines for the Three Principles on Defense Equipment Transfer[^4][^5]. The legal foundation itself is shifting beneath us, so "wait it out until oil settles down" is not a viable strategy.
What the April 2026 numbers actually mean — 95% traffic drop, $112 oil, eight months of reserves
Let me start with the numbers. According to Jiji Press's Trade Tracker data, in the week of March 30 to April 5, an average of 8.4 vessels per day passed through the Strait of Hormuz[^1]. The 2025 annual average was 93.7 vessels, so we are roughly 90% below baseline. global-scm.com's operational report updated on April 28 shows this has tightened further, holding at a 95% drop versus pre-conflict levels[^6]. A daily transit count in the single digits is unprecedented — we never saw this even during the 1980s Tanker War or the 2019 British tanker seizure incident.
Crude oil spiked to nearly $120 on March 9, then settled into a high-stable range: WTI at $112.95 on April 7, Brent closing at $105.07 on April 23, and over $106.80 on April 24[^2][^6]. WTI was in the $60s before the conflict, so prices have nearly doubled and look set to stay there. Regular gasoline retail prices in Japan jumped from 158.5 yen on March 2 to 190.8 yen on March 16 and have continued at that level through April[^2]. Meanwhile, the dollar-yen rate is hovering around 146 to 147 yen, close to the assumed rate (146 yen per dollar) used by Toyota and Nissan[^14]. For exporters, the weak yen is a partial buffer, but as I'll explain below, the logistics damage is moving to offset that gain.
A quick note on reserves. According to METI and the Agency for Natural Resources and Energy, as of March 21, Japan held 240 days of petroleum stocks in total: 146 days of national reserves, 88 days of private-sector reserves, and 6 days of joint reserves with producer countries[^11][^12]. The 254-day figure I cited in the previous article has slipped slightly because of the IEA coordinated release on March 16 and the second tranche on April 15[^4][^11]. On paper we still have about eight months left, and in my view this is Japan's last safety net. But reserves only buy time — they don't change underlying supply and demand. Whether your management reads "eight months" as "comfortable runway" or "hard deadline" will determine how quickly your organization moves.
Building alternative procurement routes is happening in parallel. According to materials from METI and the Cabinet Secretariat, the government is prioritizing alternative supply that bypasses the Strait of Hormuz and is expanding procurement quotas with the U.S., Central Asia (Azerbaijan, Kazakhstan), Latin America (Brazil, Argentina, Ecuador, Colombia, Mexico), Asia (Malaysia), Africa (Nigeria, Angola), Canada, and Singapore[^11]. By May, more than half of supply year-on-year is projected to come from non-Hormuz routes[^11]. This is a government-led effort at a scale the private sector cannot replicate, but it is a useful prompt to reorganize your own procurement spreadsheet along two axes: "Middle East dependency ratio" and "Hormuz transit ratio." From what I'm seeing on the ground, just listing things out along these two axes meaningfully sharpens the conversation at the executive level.
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Three risks for Japanese companies — energy, logistics, and the shift in counterparty countries
If you're presenting to your management committee, narrowing the discussion to three points lands best: energy costs, logistics and supply chain, and shifts in counterparty countries.
Energy costs look straightforward but get scarier when you decompose them. MUFG Bank's Corporate Planning Division Economic Research Office published an April 3 report estimating that, in a scenario where oil prices average 33% above peacetime, Japan's real GDP growth (FY2026) could be reduced by 0.1 to 0.2 percentage points and CPI inflation pushed up by more than 0.2 to 0.4 percentage points[^7]. At the macro level it looks tolerable, but the industry-level dispersion is large. Energy-intensive industries — power, chemicals, transportation, materials, paper and pulp, cement — face cost pressure several times the average. A chemicals manufacturer I know decided in their April internal meeting to "extend the hedging window for raw material unit costs from the current three months out to twelve months." That is roughly the realistic landing point right now.
Logistics and supply chain has actually been the slower-burning, more pernicious issue. Marine insurance premiums were normally below 0.125% of hull value, but war risk riders have jumped over 1,000%, with reports of up to $7.5 million in additional cost per voyage for VLCCs in the $200 to $300 million class[^8]. The big three Japanese shipping lines — MOL, NYK Line, and "K" Line — have suspended Persian Gulf transit, with up to 70,000 Japanese vehicles reportedly stranded inside the Gulf[^9]. Switching to the Suez or Cape of Good Hope routes adds 10 to 19 days of sailing time each way, so just-in-time supply chains simply jam up[^10]. Qatari helium, essential for semiconductor manufacturing, lost its only maritime export route through Hormuz, with reports that 27 to 30% of global supply has effectively disappeared and spot prices have risen 40 to 100%[^10]. Procurement managers at Japanese semiconductor equipment makers have been scrambling since April to find suppliers outside the U.S. and Qatar.
The third risk is the most overlooked: the counterparty countries themselves are moving. JETRO's Middle East trade statistics show that Japan's auto exports to the Middle East in 2025 reached an all-time high of 2.4483 trillion yen, up 15.3% year-on-year[^3]. On the import side, mineral fuels make up over 90% of imports from the Middle East[^3]. A prolonged blockade rattles both the auto export channel and the crude oil import counterparty network simultaneously. On top of that, the April 21 amendment to the Three Principles on Defense Equipment Transfer abolished the "five categories" framework, making transfer of weapons with lethal capability possible in principle, and institutionally enabling transfers to the 17 partner countries with which Japan has signed defense equipment agreements — including the UAE[^5]. The structure of Japan's Middle East exports is being rewritten at the government level from auto-centric to a structure that includes defense-related items. For export control teams in manufacturing, this is not "regulations are loosening" — it's "the items and destinations covered by list controls and catch-all controls are shifting," and it strongly demands a fresh review of Foreign Exchange and Foreign Trade Act risk.
Industry-by-industry scenarios — manufacturing, trading, energy, transportation, IT/semiconductors
Here's what's happening industry by industry, drawing only on what we can confirm from primary sources. Prose conveys the nuance better than a table, so I'm writing this in narrative form.
Within manufacturing, autos, chemicals, and materials are taking the most concentrated damage. Autos face a double hit on energy prices and material procurement, and JETRO reports that more than 70 functional chemical products in which Japan holds over 60% global share are at risk due to disruptions in naphtha supply[^3]. On the logistics side, with the big three shipping lines suspending transit, both finished vehicle exports to the Middle East and crude oil and LNG imports from the Middle East are simultaneously stalling. In construction materials, TOTO has suspended new orders for unit baths, and LIXIL has announced potential impacts on lead times and pricing[^15]. Paint, specialty vehicle, and construction equipment manufacturers have all rolled out order suspensions and shipment halts since late March, and as of late April, residential construction and public works sites are scrambling to secure materials.
Trading houses are affected from a different angle. General trading companies and specialized traders carry many EPC contracts and long-term supply agreements for Middle East projects, and the April agenda is dominated by whether to invoke force majeure clauses, when to trigger price adjustment clauses, and how to recalibrate credit lines. A friend at a general trading house told me in mid-April that they were "going through every Middle East-related long-term contract clause by clause." With the major shipping lines suspending transit, who bears the risk depends on delivery terms (CIF or FOB), which means legal, sales, and finance need to align tightly on this.
The energy industry, as I noted, is in the middle of national-level procurement diversification, and private players have entered a scramble to lock in alternative supply quotas from Central Asia, South America, North America, and Africa[^11]. LNG is extremely difficult to stockpile, so power and gas utilities looking to break their Qatar dependency are renegotiating long-term contracts with Australia, the U.S., and Malaysia. In my view, players who don't move now will face clearly differentiated fuel costs in FY2026.
Transportation is taking direct hits on route costs. The Cape of Good Hope route is 10 to 19 days longer each way than the Suez/Middle East route, and the deterioration in fuel costs, crew expenses, and vessel turnover flows directly into freight rates[^10]. NVOCCs and 3PLs have all revised their freight tables for Middle East-bound and Middle East-transit cargo since April. Shippers are receiving rate increase requests, forcing them to redo their fiscal year budgets.
IT and semiconductors look tangential to the Middle East at first glance, but the reality is severe. As I noted, the Qatari helium supply disruption is starting to affect semiconductor manufacturing yields, and there are observations that logic and memory lead times have been extended by one to three weeks since April[^10]. Data center operators are also affected on procurement of specialty cooling gases and rare metals used in UPS battery storage. The line "we don't trade with the Middle East, so we're fine" has effectively stopped being true as of April 2026.
Five operational moves to make in the next two weeks
Here is the practical checklist I hand to executives when they ask, "So what should we actually do?" These are the five common items that came up in the consultations I had in April.
First, review your internal export control procedures. METI's Cabinet decided to amend the Export Trade Control Order on November 11, 2025, and the revisions to the supplementary export controls (catch-all controls) already took effect on October 9, 2025[^13]. The amendment added an "inform" requirement for catch-all controls on weapons of mass destruction and conventional weapons targeting Group A countries (formerly white-listed countries), and for general destinations it newly established end-use and end-user requirements for specific items in Item 16(1) of Appendix 1 of the Export Trade Control Order[^13]. Companies that haven't connected their HS code-level applicability determinations to internal ERP systems are almost certainly behind on operations as of April. When switching counterparty countries because of Middle East developments, the rescreening to confirm whether the new counterparty triggers list controls or catch-all controls quickly exceeds what export control staff can handle manually.
Second, diversify suppliers geographically. Reorganize your BOM along two axes — "Middle East dependency ratio" and "Hormuz transit ratio" — and secure at least two alternative supplier countries for top-risk items (crude, naphtha, helium, specialty chemicals). This pairs with the government's procurement diversification efforts[^11]. I understand the temptation to think "we can ride this out without moving," but in my view, companies that don't lock in new supply quotas within three months will visibly lose on procurement costs in the second half of the fiscal year.
Third, audit force majeure and price adjustment clauses. For Middle East-related long-term contracts — especially raw material supply, transportation, and EPC contracts — review the trigger conditions for force majeure, the triggers for price adjustment clauses, and the cap on delivery delay penalties contract by contract. Force majeure under Japanese civil law and English/American law are interpreted differently, so check with legal by governing law. Whether the Hormuz blockade is classified as "economic sanctions" or "war/use of force" changes both insurance coverage and contract interpretation.
Fourth, reconfirm marine insurance coverage. For each of hull war risk insurance, cargo war risk insurance, and the Strikes, Riots, and Civil Commotions (SRCC) rider, confirm coverage scope, excluded waters, and the 48-hour rule (the validity period of premium surcharges) under your current policy[^8]. Japanese non-life insurers have already expanded surcharges on hull insurance in the Middle East, and you need to redo your insurance cost budget. The Trump administration has announced a reinsurance scheme exceeding 3 trillion yen covering hulls and cargo, so U.S. insurance options are also worth comparing[^8].
Fifth, redesign FX and raw material hedges. Extend the hedging window for crude, naphtha, and LNG futures from the current three to six months out to nine to twelve months where possible. The dollar-yen is stable around 146 yen, but if Hormuz drags on and U.S. rate hike expectations re-emerge, the 1 dollar = 200 yen scenario that Business Insider has flagged cannot be entirely ruled out[^14]. In my view, treat FX hedging as "insurance premium against the unexpected" and increase your forward bookings out to six to twelve months.
Running these five items in parallel requires temporarily flattening your organizational silos. Export control sits in legal, procurement in purchasing, contracts in legal and sales, insurance in corporate planning, and hedging in finance — that's the standard split. For compound risks like the Middle East situation, the most effective approach in my experience is to stand up a weekly cross-functional task force, separate from the monthly management meeting, before April ends.
If reading this leaves you thinking "doing all of this in-house is impossible," I'd encourage you to take a look at TIMEWELL's TRAFEED (an export control AI agent aligned with METI standards). TRAFEED automates list and catch-all applicability determinations, counterparty country screening, and HS code-level operational support. Trying to handle the wave of confirmation work that's triggered each time you switch counterparties manually is, frankly, no longer realistic as of April 2026.
How the April 2026 amendment to the Three Principles on Defense Equipment Transfer changes supply chain structure
On April 21, 2026, the National Security Council and the Cabinet partially amended the Three Principles on Defense Equipment Transfer and the operational guidelines[^5]. On the surface, the news reads "the rules for arms exports have changed," but from a supply chain design perspective this is an event that rewrites the structure of Middle East-related business over the medium to long term.
There are three main amendments. First, the "five categories" (rescue, transport, vigilance, surveillance, mine clearance) were abolished, making transfer of weapons with lethal capability possible in principle[^5]. Second, transfer destinations are limited to the 17 countries that have signed defense equipment transfer agreements (U.S., U.K., Australia, India, Philippines, France, Germany, Malaysia, Italy, Indonesia, Vietnam, Thailand, Sweden, Singapore, UAE, Mongolia, Bangladesh)[^5]. Third, monitoring frameworks have been strengthened with new mechanisms to track post-transfer management.
What's notable here is that the UAE is on the list. The UAE accounts for 42.3% of Japan's crude oil imports — the largest source — and has remained a relatively stable partner even amid Middle East tensions. With this amendment, an institutional channel has been established for Japanese defense-related companies to transfer equipment to the UAE, and energy imports and defense equipment exports now intersect within the same bilateral relationship. For supply chain managers, this means looking at Middle East counterparties only as "energy import sources" is insufficient — you also need to understand them in the separate context of "signatory of a defense equipment transfer agreement."
In operational terms, export controls become measurably heavier for companies handling defense-related products and their components. Equipment itself falls under list controls (Foreign Exchange and Foreign Trade Act, Appendix 1 of the Export Trade Control Order), and components and dual-use materials and electronic parts fall under catch-all controls. Even though export is now possible in principle under the amendment, you still violate the Foreign Exchange and Foreign Trade Act if you don't clear list and catch-all controls — that structure hasn't changed. If anything, the internal risk of conflating "transfer is possible" with "Foreign Exchange and Foreign Trade Act export license obtained" has grown. From April onward, export control teams will likely repeat the message: "It's institutionally possible, but the Foreign Exchange and Foreign Trade Act procedures still need to happen."
I cover the details of the Three Principles on Defense Equipment Transfer separately in this article on the Three Principles on Defense Equipment Transfer. For legal and export control teams at companies with Middle East-related exposure, I'd recommend reading through the amended operational guidelines in full.
TIMEWELL's offer — building rapid-response export control capacity with TRAFEED
To close, here's how TIMEWELL can support what I've laid out above. TRAFEED (formerly ZEROCK ExCHECK) is the world's first export control AI agent, automating list controls, catch-all controls, and applicability determinations aligned with METI standards.
Translating what's happening with the Middle East into the language of export controls, three things are moving in parallel: (1) counterparty countries are shifting on a short cycle, (2) the operational standards for list and catch-all controls are being updated, and (3) institutional changes like the Three Principles on Defense Equipment Transfer amendment are layering on top. Trying to absorb all of this manually means export control staff fill their days just answering Middle East-related queries. A manufacturing export control manager I spoke with in April told me their overtime hours since March had increased 50% versus the prior month.
TRAFEED handles HS code-level applicability determinations, automated cross-checks against sanctions lists and end-user lists for counterparty countries, and end-use/end-user checks under catch-all controls — all driven by AI agents. It's designed so that the confirmation work generated each time you switch counterparties because of Middle East developments can be completed through on-screen form input alone. Multilingual support is built in, so it works directly for companies handling English, Chinese, and Arabic transaction documents.
We also frequently hear "implementing a new service feels heavy right now — we'd like to start by reviewing our internal export control operations." For that, we offer 30-minute free consultations through TRAFEED's online consultation. Use it as a chance to organize the review points for your export control system in the context of the Middle East situation, drawing on examples from our own work. In my view, it's effectively certain that the Middle East situation will be prolonged. Two months on from the de facto closure in March, the 95% traffic drop figure in April is not the kind of number that reverses quickly. The earlier you move, the more your organization will thank you for it.
For a broader picture, Complete Guide to China's Export Controls Targeting Japan, which surveys Chinese restrictions on exports to Japan, What is a Non-Applicability Certificate?, which covers export control fundamentals, and What Are the Three Principles on Defense Equipment Transfer?, which explains the institutional framework, are useful companions. The Middle East situation is not a standalone event — it's part of a single larger structure connecting U.S.-China relations, the Taiwan Strait, and defense equipment transfers. We at TIMEWELL are committed to supporting Japanese companies' export controls through TRAFEED amid this structural shift.
References
[^2]: Plain-Language Briefing: Continuing Strait of Hormuz Closure (April 2026) | Jiji.com
[^4]: Second Tranche of National Petroleum Reserve Releases (April 15, 2026) | METI
[^5]: Partial Amendment to the Three Principles on Defense Equipment Transfer (April 21, 2026) | METI
[^6]: Strait of Hormuz Crisis: Situation and Operational Risk (Updated April 28, 2026) | global-scm.com
[^8]: Japanese Non-Life Insurers Expand Hull Insurance Surcharges in the Middle East (March 2026) | Nikkei
[^12]: Current Status of Petroleum Reserves | Agency for Natural Resources and Energy
[^13]: Cabinet Decision on Partial Amendment of the Export Trade Control Order (November 11, 2025) | METI