Japan Approves Aid for Oil Importers Facing Higher Shipping Costs

Japan’s Cabinet approved three energy-security bills Tuesday that would help oil importers absorb higher shipping costs after disruptions through the Strait of Hormuz, a move with potential implications for global energy prices and inflation expectations.

One proposed bill would create grants for importers sourcing crude oil and fuels through alternative routes that avoid major chokepoints. The package also includes support for transport insurance and amendments involving the Japan Organization for Metals and Energy Security, or JOGMEC.

The bills still require approval from Japan’s Parliament and are scheduled to be submitted during the current extraordinary session.

More than 90% of Japan’s crude oil imports previously relied on routes through the Strait of Hormuz. Japan has been pursuing supplies from the United States, Latin America, the Asia-Pacific region, Central Asia, Africa and Canada as it seeks to diversify away from Middle Eastern shipments.

The government has also released oil reserves and pursued alternative procurement to maintain domestic supply. Parliament’s review is the next step for the compensation plan.