Japan's Hormuz Shock Triggers Caspian Oil Pivot As INPEX Rewrites Supply Chains

(MENAFN- AzerNews) Akbar Novruz Read more

For decades, Tokyo’s energy planners quietly recognized an uncomfortable reality: Japan’s economy was balanced on a single thread – a 33-kilometre-wide strip of water separating Iran and Oman. When US and Israeli strikes on Iran precipitated the de facto blockade of the Strait of Hormuz in late February 2026, that thread snapped. But instead of chaos, there was the swift execution of plans that had been quietly developing over the years.

At the centre of one of those plans is INPEX, Japan’s largest oil and gas explorer, and its stakes in two fields that, until recently, existed primarily to supply European markets. Now, those Caspian barrels are being redirected home.

The scale of Japan’s vulnerability is difficult to overstate. As of January 2026, 95.1% of Japan’s crude oil imports originated from the Middle East, with roughly three-quarters of that volume transiting the Strait of Hormuz. Japan alone was importing 1.6 million barrels per day through that route. When the blockade took hold, over 150 tankers were left stranded outside the strait, unable to load or depart.

On 16 March, Tokyo announced the largest emergency reserve drawdown since the reserve system was established in 1978, 80 million barrels, enough to cover approximately 45 days of consumption. The move underscored both the urgency and the limitation of Japan’s buffer: reserves buy time, but they cannot replenish themselves while the blockade holds.

Into this emergency, INPEX steps in. The company has substantial upstream holdings in two of the Caspian region’s most productive fields: the Azeri-Chirag-Guneshli complex off the coast of Azerbaijan, in which INPEX has just increased its interest, and the giant Kashagan field in Kazakhstan, which is among the biggest oil discoveries in the world. Until now, production from these fields has been sold primarily to European markets in the spot market.

Reporting by Japan’s Yomiuri Shimbun and NHK confirms that INPEX has decided to give domestic Japanese buyers priority in the sale of oil from both fields. The volumes involved are not symbolic: redirecting even a portion of ACG and Kashagan output represents a meaningful contribution to Japan’s emergency procurement strategy.

** “Europe may lose part of its oil supplies from Kazakhstan and Azerbaijan - the decision was made because of the crisis in the Middle East.” - Yomiuri Shimbun**

The impact on European buyers is real, though not necessarily disastrous. ACG’s output, carried west through the Baku-Tbilisi-Ceyhan pipeline to the Mediterranean port of Ceyhan, Türkiye, has been an established part of the European spot markets. A shift in INPEX’s allocation to the east only further constricts an already challenged supply landscape for the continent, still readjusting from its Russia experience.

There is another, deeper strategic level to all of the above, which extends beyond the current crisis. INPEX’s shift is, at bottom, an expression of institutional support for Azerbaijan and Kazakhstan as viable, non-Hormuz alternatives. For Baku, which has gone to great lengths over the past few years to establish itself as the linchpin of the entire Middle Corridor, the timing could not be better.

The great advantage of the Caspian is its geography, whereby oil can travel westward through the BTC, thereby avoiding the Strait altogether, or through the Russian or Iranian routes, none of which cross the Persian Gulf. In an age where already 95% of Japan’s oil supply is at risk due to one single blockade, this is not merely an economic asset; it is an issue of national security.

ACG oil travels via the Baku–Tbilisi–Ceyhan (BTC) pipeline - 1,768 km - to the Turkish Mediterranean port of Ceyhan, entirely avoiding the Strait of Hormuz and the Persian Gulf. From Ceyhan, tankers can reach Asian markets via the Suez Canal or around the Cape of Good Hope. Kazakhstan’s Kashagan oil is primarily exported via the Caspian Pipeline Consortium (CPC) route to Novorossiysk on the Black Sea.

Mizuho Bank estimates that if crude prices hold in the $90–$100 range, Japan’s annual trade deficit could widen by nearly 10 trillion yen. The auto industry, built on just-in-time logistics, is particularly exposed: any sustained fuel disruption risks cascading through the production chains of Toyota, Honda, and Nissan simultaneously. For ordinary Japanese households, fuel subsidies are currently holding pump prices to around ¥161–165 [estimates around 1$] per litre - but without those subsidies, some estimates project prices rising toward ¥200 per litre if the blockade persists.

Surely, the Caspian pivot by INPEX is not going to address the structural weakness in the Japanese position by itself. The 93.5% dependency in the Middle East is the result of decades of energy policy, not the result of any particular corporate decision, and it cannot be reversed by the corporate decision to change the priority of two fields. But it does mark the end of the era in which Caspian oil was seen as a European oil and Persian Gulf oil was seen as an Asian oil. The crisis has rewritten the commercial map, and Azerbaijan, by virtue of its geography, by virtue of the investments that have been made in it, by virtue of the gradual accumulation of the value of its role as a transit point, is now at the center of it.

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