Japan gov't mulls cost-sharing among private firms for oil bypassing Hormuz

On Friday, Japan's industry ministry proposed a system to share the additional costs of importing crude oil that bypasses the Strait of Hormuz, according to Kyodo news agency. The idea aims to diversify the procurement sources for the resource-poor nation, which has traditionally relied on Middle Eastern imports for over 90 percent of its crude oil.

However, households may face higher gasoline prices if companies pass on the increased expenses. The ministry presented the idea to a task force discussing ways to enhance the supply capacity of oil products. The current journey for Middle East-produced crude oil takes about 20 days, whereas U.S.-origin oil via a route near South Africa's Cape of Good Hope can take around 50 days, leading to additional fuel and personnel costs.

The government-backed Japan Organization for Metals and Energy Security would collect a levy from oil wholesalers and trading companies to fund subsidies for businesses importing oil that does not pass the Strait of Hormuz. The closure of the strait due to the recent U.S.-Israeli war with Iran has driven Japan to seek alternatives, with its oil imports from the United States expected to increase tenfold in August compared to the previous year.