Japanese calm - but keeping careful watch on escalation of Iran-Iraq conflict

Of all oil-consuming nations, Japan potentially is most vulnerable in the event of a shut-off of supplies through the Gulf. Yet despite a recent escalation of the Iran-Iraq conflict, including attacks on oil tankers in the Gulf, the Japanese remain relatively calm.

''There is no fear of an oil supply stoppage'' at present, Trade Minister Hikosaburo Okonogi assured the nation this week. ''There is no basic problem with oil prices and imports by Japan, and we will watch the situation calmly.''

One reason, explains diplomatic analyst Kentaro Koshiba, is that ''people in this country have become almost inured to repeated talk of a 'third oil crisis.' ''

Nevertheless, the tanker attacks, an Iraqi vow to keep blockading Iran's vital Kharg Island oil terminal, and Iranian threats to retaliate by closing the crucial Strait of Hormuz, are not taken lightly in government or business circles. Premier Yasuhiro Nakasone says he will raise the Gulf war issue at next month's London summit of seven industrialized nations.

Japan had hoped to use its unique position as the only Western-bloc nation enjoying good relations with both Tehran and Baghdad to bring the two sides closer to a negotiated settlement of their dispute. But such initiatives so far appear to have made little impression.

Given that Japan cannot constitutionally or physically play any military role , it remains unclear in Japanese minds what more can be done than urging Iran and Iraq to show ''maximum self-restraint.''

A visiting Arab League mission, including the foreign ministers of Kuwait and Iraq, has suggested Japan should cut back or even stop oil imports from Iran in the hope that a fall in its oil earnings would force Tehran to the negotiating table. Both Mr. Nakasone and Foreign Minister Shintaro Abe sidestepped this by pointing out that all purchases of Iranian oil were handled on a commercial basis and the government could not intervene.

Nevertheless, imports are slipping. Last year they averaged 395,000 barrels a day, representing 11 percent of Japan's needs. Currently, dealers reckon purchases are down to 200,000 barrels a day and could drop even further - but more for commercial than political reasons.

The escalation of the Gulf war has pushed up insurance rates on oil cargoes, for example, and Japanese oil companies are now locked in a dispute with the Iranians over whether this should be compensated for by a drop in the crude price.

There are threats to buy elsewhere, although some Japanese worry this could hurt Tokyo's relations with Iran and also possibly damage the image Japan has tried to project of an even-handed approach to the Gulf war.

But the larger issue is the fact that about 65 percent of Japan's oil comes from the Gulf against an estimated 4 percent for the United States. And the local oil industry is considering the impact of the prospect of these supplies being shut off. Options include more spot purchases of oil from China, Mexico, and Indonesia, for example.

Experts say Japan could handle a short-lived oil shortage with its 120-day oil stockpile and increased cooperation within the International Energy Agency.

You've read  of  free articles. Subscribe to continue.
QR Code to Japanese calm - but keeping careful watch on escalation of Iran-Iraq conflict
Read this article in
QR Code to Subscription page
Start your subscription today