Japan faced a trade deficit of $17.8 billion (equivalent to 2.82 trillion yen) in the first half of the fiscal year 2026 (April to September), nearly double the deficit recorded last year. This increase in the trade deficit is due to Middle Eastern crises and rising energy import costs for the resource-poor G7 economy.
Increase in export and import values
According to data from Japan's Ministry of Finance, during this period, the value of the country's exports increased by 18.4% while the value of imports rose by 20.4%. Despite a 21.2% decrease in the volume of crude oil imports, the value of these imports increased by 26.3%. Additionally, the volume of petroleum product imports also decreased by 26.8% while the value increased by 23.2%.
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Impact of the Gulf crisis on LNG imports
The volume of liquefied natural gas (LNG) imports also decreased by 8.4% during this period, but the value of imports increased by 13.5%. These data indicate rising oil and LNG prices in the six months leading up to September. Following the closure of the Strait of Hormuz, which was one of Japan's key sources of oil imports before the war, oil import costs reached new records.
Japan, one of the largest LNG importers in the world, reduced gas-fired electricity generation this summer due to high liquefied natural gas prices and turned to coal. Additionally, with the onset of war in the Middle East, Japan has been trying to secure crude oil from alternative sources, while the country's dependence on crude oil from the Middle East, which passes through the Strait of Hormuz, accounts for over 90% of total crude oil imports.
Japan's government measures for energy supply
The G7 economy has utilized its strategic reserves to meet its oil needs and is working to join the coordinated global efforts of the International Energy Agency (IEA) to release 400 million barrels of oil and petroleum products. Earlier this month, the Japanese government approved three bills to increase the diversity of oil sources and energy security, which include providing financial assistance to Japanese oil importers to offset high transportation costs for sourcing from outside the Middle East.
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