The closure of the Strait of Hormuz, or even the threat of it, has sent shockwaves through global energy markets, with Japan and Singapore facing heightened energy security risks due to recent U.S. and Israeli military actions against Iran [1][2]. Oil prices have surged, with West Texas Intermediate (WTI) one-month futures reaching new highs on March 24, 2026, as traders priced in the risk of a prolonged supply disruption [1]. Market analysts warn that a sustained closure could push benchmark crude prices well above $120 per barrel, a level not seen since the early 2020s, potentially impacting Japan's trade balance, consumer prices, and industrial output [1].
Japan is particularly vulnerable, with more than 80% of its crude oil imports passing through the Strait of Hormuz [1]. The yen has come under pressure as rising import costs create additional economic headwinds [1]. In response, Japan is expected to draw down on its strategic petroleum reserves, which currently stand at about 220 days of net imports, but analysts caution this is only a temporary measure [1]. A Tokyo-based commodities strategist emphasized the need for Japan to prioritize domestic resilience through renewables, energy efficiency, and possibly nuclear restarts, as reliance on Middle East oil is no longer sufficient [1].
In contrast, Singapore's energy system is seen as materially limiting near-term tail risks from Middle East tensions, according to MUFG’s Senior Currency Analyst Lloyd Chan [2]. Singapore benefits from deep energy infrastructure, diversified sourcing, large inventories, untapped fuel reserves, and the ability to switch fuels and expand reserves [2]. No rationing measures have been introduced so far, and strong public finances allow for further stockpiling and targeted support if disruptions persist [2]. While natural gas accounts for approximately 95% of Singapore's electricity generation and Qatari supplies face stress, Singapore imports LNG from Australia and the US, and retains the ability to switch to diesel for electricity generation [2].
Both sources note that vulnerabilities would rise if disruptions to energy flows through the Strait of Hormuz are prolonged, with Singaporean policymakers considering further expansion of fuel reserves as a precaution [2].
CONCLUSION
The closure of the Strait of Hormuz has triggered a sharp rise in oil prices and exposed varying degrees of energy security risk for Japan and Singapore. While Japan faces immediate challenges due to its heavy reliance on Middle Eastern oil, Singapore's diversified energy infrastructure and fiscal strength provide a buffer against near-term shocks. Both countries, however, may need to further bolster their energy resilience if disruptions persist.