Rising crude prices force Japan to adjust its gasoline pricing strategy

On March 27, Japan’s Ministry of Economy, Trade and Industry (METI) recommended that domestic wholesale companies use Brent crude as a reference for gasoline pricing instead of Dubai crude. The guidance aims to curb rising fuel costs amid the ongoing Middle East conflict. Reuters obtained a copy of the document outlining this measure, as per Reuters.

Japan, which relies on Middle Eastern oil for more than 90% of its imports, has deployed a range of tools to mitigate the impact of the war in Iran. These include partial releases from its oil reserves and consideration of interventions in the crude oil futures market to reduce the yen’s vulnerability. METI declined to comment on the content of the document.

The supply crisis has also affected other Asian countries. According to the METI document, Vietnam, Indonesia, and India have sought Japan’s support. Vietnam requested crude oil for its Nghi Son refinery, co-owned by Idemitsu Kosan. In addition, Japan’s Inpex Corporation may consider supplying liquefied natural gas (LNG) to India in exchange for crude oil, while Indonesia has expressed interest in procuring LNG from Inpex. Inpex, along with major Japanese refiners and wholesalers Eneos Holdings and Cosmo Energy Holdings, declined to comment. Idemitsu Kosan did not respond to a request for comment.

Last week, Dubai crude reached a record $170 per barrel, surpassing Brent and making Middle Eastern oil the most expensive globally. The surge followed supply cuts after S&P Global Platts excluded three of five Dubai crude grades in anticipation of prolonged shipping disruptions through the Strait of Hormuz.

According to METI, Japanese companies are currently purchasing oil at $140–$200 per barrel, reflecting the sharp spike triggered by the U.S.-Israeli military campaign against Iran. Brent crude futures are trading around $100 per barrel, below the Dubai benchmark. Switching to Brent as a reference is expected to help limit gasoline price increases.

While METI’s administrative recommendation is not legally binding, Japanese companies generally comply. Gasoline prices in Japan have surpassed 190 yen ($1.19) per liter this month, a record that prompted government subsidies.

Japan began releasing crude from private reserves on March 16 and accessed national reserves, as well as joint reserves with three Gulf oil-producing countries, on March 26. Prime Minister Sanae Takaichi requested additional coordinated releases from the International Energy Agency, led by Fatih Birol, during a meeting in Tokyo this week.

By Tamilla Hasanova