Fuel prices in Japan
have soared to their highest level in 3.5 years, hitting consumers hard. According to the most recent weekly report of the Agency for Natural Resources and Energy, the domestic average retail price for regular gasoline went up to 152.1 Japanese yen per liter, representing a 10 percent increase compared to the previous year. While the price in Tokyo prefecture stood slightly below the average, gasoline was most expensive in the southern prefecture of Nagasaki, amounting to almost 161 Japanese yen.
Domestic market tightness stemming from refinery turnarounds and outages, sluggish domestic demand as well as increasing crude oil prices of the OPEC countries since early 2017 have led to the rising fuel prices in Japan
. In addition, tensions in the Middle East caused by the Trump administration pulling out of the Iran nuclear deal and their renewed sanctions might further aggravate the gas price situation. Although only around 5 percent of Japan’s crude oil imports come from Iran, the U.S. measures could affect the Japanese industry. Domestic refiners have urged their government to hold talks with the U.S. to get a waiver on their renewed sanctions. Fuji Oil and Cosmo Energy reported they may halt Iranian crude oil imports, while shipping companies and major banks, such as MUFG or Mizuho Bank, have already indicated they might discontinue transactions with Iran fearing to be excluded from the American financial system. Japanese consumers might even have to seek alternative means of transportation since gas prices are unlikely to decrease soon.