Gas company leaders in Japan warned on Wednesday of a potential decline in natural gas demand in the country if the war in Iran continues to affect the naphtha supplies necessary for petrochemical plants. These developments could lead to a decrease in gas sales, negatively impacting a wide range of manufacturers that rely on resins, including plastics.
Masataka Fujiwara, president of Osaka Gas, stated during a press conference that the company supplies gas to factories, and if these factories are forced to cut production due to a shortage of essential materials, the company's gas sales will decline. He emphasized that there is a potential impact if their customers cannot continue manufacturing operations.
Details of the Situation
Tokyo Gas also warned about the potential repercussions of naphtha shortages among manufacturers. Shinichi Sasayama, president of Tokyo Gas, pointed out that many customers rely on naphtha or other petroleum products in their manufacturing processes, meaning that any reduction in their activities could affect gas sales.
Japan imports about 6 percent of its liquefied natural gas supplies through the Strait of Hormuz, which has been significantly affected by the ongoing conflict. Before the war broke out in February, approximately 90 percent of Japan's oil needs passed through this strait.
In this context, Fujiwara confirmed that Osaka Gas has secured sufficient supplies of liquefied natural gas, with most gas coming from Australia and the United States. He explained that the company relies on long-term contracts to secure its needs, and there are currently no long-term contracts for purchasing gas through the Strait of Hormuz.
Background & Context
It is noteworthy that Japan's imports of liquefied natural gas, which is the second-largest importer in the world after China, decreased by 1.4 percent in 2025 compared to the previous year, reaching 64.98 million metric tons. This decline comes amid the restart of nuclear power plants, increased use of renewable energy, and enhanced energy efficiency.
Data from the Japanese Ministry of Industry showed that liquefied natural gas inventories at major utility companies rose to 2.39 million tons for the week ending March 22, an increase of 5 percent from the previous week.
Impact & Consequences
Under these circumstances, concerns are growing about the impact of the current situation on the Japanese economy. Several monetary policymakers at the Bank of Japan have indicated the need to raise interest rates to address increasing inflationary pressures. Some members have called for immediate action to counter these pressures, reflecting their hawkish stance even before the Iranian war led to rising oil prices.
Minutes from the Bank of Japan meeting revealed that some members see the necessity of raising interest rates within a few months, emphasizing its importance in curbing the weakening yen that affects import costs.
Regional Significance
These developments in Japan serve as an indicator of the impact of regional conflicts on global markets, as the war in Iran directly affects energy supplies. This situation may reflect on oil and gas prices in Arab markets, increasing economic pressures in the region.
In conclusion, Japan remains on alert for developments in the Middle East, as any changes in gas supplies could significantly impact the Japanese economy and, consequently, global markets.