The Nikkei 225 Index plunged 6% toward the 52,000 level on Monday, falling to its lowest point in two months as crude oil prices surged past $100 per barrel. The jump in energy prices, driven by mounting concerns over a prolonged conflict in the Middle East, has intensified fears of renewed inflationary pressures.
The selloff comes as the widening US-Israel conflict with Iran enters its second week with no clear resolution in sight. At the same time, major oil producers in the region have cut output, while shipments through the Strait of Hormuz have been disrupted.
Japan is especially exposed to such developments, sourcing about 95% of its oil imports from the Middle East, with roughly 70% transported via the Strait of Hormuz. This heavy dependence leaves the country highly vulnerable to supply shocks and price spikes.
In response to the escalating Iran crisis and associated energy risks, the Japanese government is considering drawing on part of its national oil reserves.
