en.Wedoany.com Reported - Japan has approved an additional $19.4 billion budget to address the pressure on domestic inflation caused by disruptions in oil and natural gas supplies from the Middle East.
According to Bloomberg, the plan, signed this week by Prime Minister Sanae Takaichi, includes a $16 billion reserve fund specifically designed to control energy commodity prices through additional subsidies, initially aimed at capping gasoline prices at gas stations. Reuters reported that the additional budget will be fully funded through deficit financing bonds, with the Takaichi administration avoiding an increase in the overall national bond burden and instead relying on higher tax and non-tax revenues.
Japan is one of the countries most vulnerable to the impact of the Middle East conflict, given its heavy reliance on energy imports and the severity of war-related disruptions. A significant portion of its imported crude oil comes from the Persian Gulf, and although the United States is willing to serve as an alternative source, fully replacing these imports remains challenging. Japan's crude oil imports in April fell by 66% year-on-year, with May data likely to continue declining. Japanese government data shows that imports from Saudi Arabia plummeted by nearly 58%, while imports from the United Arab Emirates dropped sharply by 69.4%. Despite the severely reduced total crude oil supply, the Middle East still accounts for over 90% of Japan's crude oil imports, with this figure standing at 93.7% in April.
Since the outbreak of the Middle East conflict, Japan has actively secured crude oil supplies from alternative sources and released stockpiles from the world's largest reserves. However, the reserve releases have still been insufficient to curb rising commodity prices, prompting the creation of this additional spending plan.
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