Arab News Japan

TOKYO: The potential closure of the Bab el-Mandeb Strait by the Houthis would significantly disrupt Japan’s crude oil imports from the region, according to Japanese expert KIUCHI Nobuhide.

In a study published by the Nomura Research Institute, Kiuchi suggests that the Houthis may have acted at Iran’s request, referencing July 16 reports indicating that Tehran asked them to close the Bab el-Mandeb Strait if the United States targeted Iranian energy infrastructure. This action could represent Iran’s response to ongoing United States military operations.

However, Kiuchi notes that details remain unclear, and it is uncertain whether the Houthi announcement entails a complete blockade of vessels transiting the Bab el-Mandeb Strait, which serves as an alternative route to the Strait of Hormuz.

West Texas Intermediate crude futures increased from 80 dollars per barrel late last week to 85 dollars yesterday, currently stabilizing near 83 dollars. Kiuchi attributes this price rise to both the collapse of the memorandum of understanding aimed at ending hostilities between the United States and Iran and heightened concerns regarding potential disruptions to crude oil shipments through the Red Sea via the Bab el-Mandeb Strait. He projects that crude oil prices could reach approximately 90 dollars per barrel if the strait is fully closed.

Estimates suggest that a complete closure of the Bab el-Mandeb Strait would disrupt approximately 7 percent of global crude oil supplies, thereby affecting Japan’s imports of alternative oil transported via the Red Sea route. The Japanese government has indicated the potential to import 2.4 million barrels per day through alternative routes that bypass the Strait of Hormuz, a volume that nearly matches the projected daily domestic demand of 2.35 million barrels in 2025. For security reasons, Kiuchi notes that the government has not disclosed specific details regarding these alternative sources.

The Japanese expert assesses that roughly half of these imports originate from the United States, while the remainder is sourced from the Middle East, primarily Saudi crude oil transported via a pipeline from the Arabian Gulf to the Red Sea coast, circumventing the Strait of Hormuz.

If the Bab el-Mandeb Strait closes, Japan could face many economic problems: shrinking emergency oil supplies, growing trouble getting crude oil and naphtha, and weakened confidence in the business sector.

Oil companies might preemptively cut production, potentially leading to shortages of everyday goods made from naphtha.

As crude oil prices climb and naphtha grows scarce, consumers could see everyday costs surge. Struggles to keep prices stable, along with a weakening yen and falling bond prices, may drive up import expenses and long-term interest rates even further.