Japan Trade Chief Warns Strait of Hormuz Closure as Tensions Rise

Crude oil, tracked through the United States Oil Fund (AMEX:USO), traded at 125.51 dollars on Tuesday, up 1.25% for the session and sitting well inside its 52 week range of 102.42 to 154.08. The gain comes as shipping executives warn that the Strait of Hormuz has again become too dangerous for tankers to cross, reviving a supply threat that has haunted energy markets for months.

A Shipping Lane Nobody Wants to Use

Masahiro Okafuji, chair of the Japan Foreign Trade Council and chief executive of trading house Itochu Corporation, told reporters this week that vessel operators are simply staying away from the strait. "No one would go there, because it's dangerous," he said at a media briefing, describing a return to the kind of risk that has periodically shut down one of the world's busiest oil and container corridors. Rerouting ships around the Cape of Good Hope, he estimated, would push transportation costs up more than 30%, a burden that eventually lands on fuel buyers and consumer goods prices alike.

The Joint Maritime Information Center backed up that assessment on Tuesday, keeping its threat rating for the Strait of Hormuz at "severe" after raising it last week when the ceasefire between the United States and Iran began to unravel. The center's advisory flagged a heavier naval presence, more frequent hailing and monitoring by Iran's Revolutionary Guard, and the possibility that ships carrying automatic identification signals could be pushed toward a northern route that runs closer to Iranian control. Crews were also told to brace for congestion near anchorage points as vessels wait out the tension.

Japan's Scramble for Barrels Outside the Middle East

Before this crisis, roughly 95% of Japan's crude imports came from the Middle East, a dependence that left refiners exposed the moment Hormuz traffic seized up. That exposure showed up starkly in April, when Japan's crude imports from the Middle East fell to their lowest level since record keeping began in 1979. Tokyo responded with its largest ever release of strategic oil reserves, a move that has allowed refiners to keep throughput running even as the traditional supply route stayed unreliable.

Refiners have also leaned on cargoes from producers outside the Middle East, including the United States, plus unusual shipments from Azerbaijan and Latin America. That diversification has cushioned the blow, though it has not erased the extra cost and complexity of sourcing crude from farther afield.

What the Dollar and Inventories Say About Where Prices Go Next

USO's relative strength index reads 60.19, a level that suggests buying interest without yet flashing overbought warnings. That leaves room for further gains if Hormuz tensions persist or escalate, though the fund remains roughly 40 dollars below its 52 week high of 154.08, a reminder that markets have seen sharper price spikes tied to this same conflict earlier in the year. A stronger dollar tends to weigh on oil priced in that currency, but geopolitical risk premiums have repeatedly overridden that relationship in recent months. For now, the strait's severe threat rating and Japan's continued reliance on emergency reserves suggest the supply squeeze driving crude prices has not eased, even as alternative sourcing takes some pressure off the most exposed buyers.

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