Japan’s Trade Deficit Balloons as Energy Costs Surge

The Strait of Hormuz crisis has left Japan grappling with a 2.82 trillion yen trade deficit, as the resource-poor economy contends with energy import costs that have nearly doubled since last year. Finance Ministry data for the first half of fiscal 2026 highlights the vulnerability of Japan’s energy-dependent infrastructure.

Money Talk·October 21, 2026·reads: 1,334

Japan’s Trade Deficit Balloons as Energy Costs Surge

While export values climbed 18.4% during the period, the 20.4% spike in import costs proved insurmountable. The disconnect between volume and value is stark: petroleum import volumes dropped 21.2%, yet their total cost surged 26.3%. A similar trend hit liquefied natural gas, where an 8.4% reduction in volume did not prevent a 13.5% increase in spending. Skyrocketing freight and insurance premiums, compounded by the closure of the Strait of Hormuz—the primary artery for over 90% of Japan’s crude—have pushed the national oil bill to record highs.

To manage the strain, the government has pivoted toward coal for power generation and tapped into strategic reserves as part of a 400-million-barrel IEA-coordinated release. Officials have also approved legislative grants designed to offset the prohibitive shipping costs of sourcing fuel from outside the Middle East. These measures aim to accelerate supply diversification, though the transition remains a heavy burden for the G7 economy as global energy prices stay elevated.