Energy Crisis Slams Japan as Weak Yen Sends Import Costs Surging

(Bloomberg) -- The slump in the Japanese yen, the war in Ukraine and a heatwave in Tokyo are pushing the world’s third-biggest economy toward a full-blown energy crisis.

Japan imports about 90% of its energy, mostly priced in dollars, and costs were already soaring from a jump in global oil, gas and coal prices, even before the yen fell to its lowest level in two decades.

The price of Brent oil, a benchmark for global trade, has risen more than 40% in dollar terms this year, bolstered by Russia’s invasion of Ukraine and a recovery in demand. But in yen terms, it’s up almost 70%. The average cost to import a ton of liquefied natural gas in the Japanese currency was almost 120% higher in May than a year earlier, according to the latest trade data.

“A confluence of factors, including the higher fuel prices since the war and the tumbling currency, is putting a significant pressure on Japan's energy security, making this one of the most serious energy crises Japan has had,” said Jane Nakano, a senior fellow at the Center for Strategic & International Studies.