【Iran Crisis】Takaichi Sanae Orders Assessment of Oil-Related Product Supply Chains to Address Crisis; Finance Ministry Reportedly Consults with Markets on Possible Crude Oil Futures Intervention

Japan’s Prime Minister Sanae Takaichi has ordered a comprehensive assessment of the oil-related supply chain to respond to the impact of the Iran war. On the other hand, the Ministry of Finance has reportedly consulted market participants about possible intervention in crude oil futures, seemingly to ease the dual pressures on commodity prices and exchange rates.

Takaichi convened a meeting with relevant ministers in Tokyo and delegated the evaluation task to Economy, Trade and Industry Minister Akira Akazawa. After the meeting, Takaichi stated that she has asked the relevant ministers to continue accelerating their responses to maintain energy security. Akazawa will be responsible for reviewing the entire supply chain of oil-related products, including naphtha, a key raw material for plastic production.

Japan has begun utilizing its oil reserves and pledged to keep gasoline prices at 170 yen per liter through subsidies.

Most of Japan’s oil imports come from the Middle East, and transportation must pass through the Strait of Hormuz. Takaichi emphasized that maintaining peace and stability in the Middle East, including ensuring the safety of shipping through the Strait of Hormuz, is crucial for Japan and the international community.

Additionally, sources say the Ministry of Finance has contacted major banks involved in oil trading in Tokyo to gauge market opinions on intervening in crude oil futures. This preliminary inquiry by the Ministry of Finance is somewhat similar to a “currency inquiry,” a preparatory step for potential intervention in the foreign exchange market.

Finance Minister Shōgetsu Katayama stated that the market has generally noticed that speculative trading in crude oil futures is affecting the foreign exchange market, and that the government is prepared to take “all possible measures at any time” across all areas, implying that the authorities’ potential actions may not be limited to the forex market but also include crude oil futures.