From chemical producers to sento baths, Japan feels the heat from Middle East supply crisis

TOKYO – Japanese companies, from steel producers to chemical firms and even sento baths, are feeling the heat from reduced Middle East energy supplies, even as the government tapped stockpiles for a record oil release to soften the blow.

Japan relies on the Middle East for around 90 per cent of its oil supplies, which mainly flow via the Strait of Hormuz, which is effectively closed as a result of the US-Israeli war on Iran.

JFE Steel, Japan’s second-biggest steelmaker, on March 19 shut down one of the five power generation facilities in south-western Hiroshima prefecture, due to the shortage of heavy oil, a spokesperson said.

The spokesperson said steelmaking facilities at JFE, a unit of JFE Holdings, are operating as usual.

The move adds to the growing number of businesses suffering from the energy supply disruptions.

Oil crunch may boost nuclear

Petrochemical companies are cutting output amid fuel shortages and rising costs, with Mitsubishi Chemical saying it will raise prices by at least 70 yen (S$0.56) per kilogramme from March 20 for products used in sectors from construction to vehicles.

Refinery runs across Japan have fallen below 70 per cent as at March 14 for the first time since 2025, and the government rolled out petrol subsidies from March 19 to compensate for the record spike in prices to more than 190 yen per litre.

Japan may seek to purchase oil from non-Gulf destinations, including from the United States, and use more coal in its power generation, according to officials.

“I think it will probably bring back the feeling that nuclear power is important, once again,” Mr Ryosuke Tsugaru, senior managing executive officer with JERA, Japan’s top power generator, told Reuters.

JERA itself does not have nuclear power plants but its shareholder, Tokyo Electric Power, in February restarted its first reactor after the Fukushima Daiichi accident in 2011.

As supplies become tighter, even Japan’s popular snacks and public baths – known as sento – are halting production, reducing hours or shutting.

Katsuragi Onsen, a small sento in Aomori prefecture in northern Japan, said on March 17 it will close at the end of May.

“Due to the burden of fuel costs, we became unable to maintain business operations,” the notice, posted on X, said. “Since the first opening in 1968, we have been supported by the local community, and we would like to express our deepest gratitude to everyone for their warm support.”

As the Middle East crisis begins to hit end users, Japan’s household paper industry association issued a statement on March 18 saying nearly 100 per cent of toilet paper in Japan is produced domestically from locally sourced materials: “We ask consumers for their understanding... and to remain calm.” REUTERS