Hey everyone, Hirokichi here.
This time I’m covering President Trump’s declaration that the US will become the “guardian of the Strait of Hormuz.” It ties directly into oil prices, inflation, and even the stock market, so I wanted to break down what it means for our household budgets.
What’s happening? Iran blockade resumes and a 20% “toll”
In late February 2026, a US-Israeli strike on Iran effectively shut down the Strait of Hormuz (the narrow waterway between Iran and the Arabian Peninsula that around 20% of the world’s oil shipments pass through). A ceasefire took hold in June, but tensions flared again in July. On July 7, three tankers near the strait came under attack, and the US Treasury reversed a measure that had allowed some Iranian oil exports (source: IG Securities).
Then on July 13, President Trump announced that the US Navy would resume its blockade against Iran. He also declared that the US would “become the guardian of the Strait of Hormuz” and said Washington would collect 20% of the value of all cargo passing through the strait as a “toll” (source: Bloomberg, Al Jazeera). The blockade took effect at 4pm ET on July 14.
In response, the International Maritime Organization (IMO), a UN agency, said it “stands firmly against charging fees for passage through straits used for international navigation.” Iran’s military has also pushed back, saying it “will not, under any circumstances, allow the US to interfere in the management of the Strait of Hormuz.” The situation remains fluid (source: CNBC, Nikkei).
Why this matters for Japan: over 90% of crude oil comes from the Middle East
For Japan, the Strait of Hormuz is not someone else’s problem. Japan sources more than 90% of its crude oil imports from the Middle East, and most of it passes through this strait. Around 40% of imported naphtha (a raw material used in petrochemicals) also comes from the Middle East. In other words, instability in the strait doesn’t just hit gasoline and kerosene, it ripples through supply chains for everything from plastics to countless everyday products (source: MUFG Bank Corporate Planning Division report).
Impact on households: gasoline prices already spiked once
The effects showed up quickly after tensions escalated in late February. According to reports, the price of regular gasoline jumped from 158.5 yen/L on March 2 to 190.8 yen/L on March 16. Diesel rose similarly, from 146.6 yen to 178.4 yen, both up around 20% in just two weeks (source: Jiji.com).
That’s roughly a 30-yen jump per liter in just two weeks for both gasoline and diesel. If the renewed blockade and toll collection drag on, there’s a real risk of a similar or even bigger spike happening again.
MUFG Bank estimates that if the disruption in the Strait of Hormuz continues, Japan’s real GDP growth could be pushed down by roughly 0.1 to 0.2 percentage points compared to normal conditions, while consumer price inflation could rise by more than 0.2 to 0.4 percentage points (source: MUFG Bank Corporate Planning Division report). That translates into a slow squeeze on household budgets through higher electricity bills, gas bills, and imported food prices.
Impact on oil prices, the yen, and the stock market
Markets have reacted sharply too. After the tanker attacks on July 7, WTI crude (the benchmark oil price index on the New York futures market) rose 2.76% from the previous day, and on July 13 it briefly touched the $73-77 per barrel range. Brent crude (the European benchmark) climbed to the $78-79 range, its highest level since June 22 (source: IG Securities, CNBC).
In the currency market, concerns about Japan’s trade deficit widening due to higher oil prices have kept pressure on the yen to weaken. In fact, on July 14, the Nikkei 225 in Tokyo trading fell more than 900 points in the morning before staging a sharp recovery to close up 500 points, a wildly volatile session. I covered that day in detail in this article on the Nikkei’s dramatic 500-point turnaround, so check it out if you’re curious.
What to watch next: 3 key points
Here are three things I’ll be watching closely going forward.
(1) Whether the 20% toll actually gets collected. Opposition from the international community, including the IMO, is strong, and the practical details, who collects it and how, remain unclear.
(2) Whether Iran takes further military action. Iran’s military has said it will not allow US interference, so there’s a real chance of more sporadic incidents like the tanker attacks.
(3) How closely gasoline prices track crude oil prices. With both WTI and Brent trading at elevated levels, there’s a chance this feeds through to domestic gasoline prices with some lag.
All three of these could affect Japan’s prices, household budgets, and the broader stock market, so I’ll keep watching closely.
Let’s keep at it, slow and steady. See you next time!
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* This article is for informational purposes only and does not recommend any specific investment. Please make investment decisions at your own responsibility.
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