TOKYO - Japan’s benchmark stock index plunged sharply at the start of the week, at one point dropping more than 2,800 points, as surging crude oil prices driven by tensions surrounding Iran rattled markets and raised fresh concerns over the stability of alternative energy supply routes.
The Nikkei average tumbled immediately after trading began on March 30th, with losses exceeding 1,000 yen by 9 a.m., as stock boards turned almost entirely green, indicating widespread declines, before the index continued to fall and briefly dropped more than 2,800 yen, ultimately closing down 1,487 yen at 51,885.
The sharp decline was largely attributed to rising crude oil futures, which temporarily climbed to the 103-dollar-per-barrel range amid concerns that the effective closure of the Strait of Hormuz could be prolonged.
Since the onset of attacks on February 28th, markets have repeatedly slumped at the start of the week, with the latest sell-off triggered by developments over the weekend, echoing what has been described as a recurring “Devil’s Monday” pattern.
Major U.S. media outlets reported that President Donald Trump is considering a ground operation aimed at securing enriched uranium held by Iran, noting that while no final decision has been made, Trump is broadly supportive of the plan.
The surge in oil prices linked to the Iran situation is already beginning to affect daily life in Japan, including at a long-established public bathhouse in Tokyo’s downtown area, known for its open-air natural hot spring baths and two types of saunas, where entry is priced at a modest 550 yen.
Shinbo Takuya, owner of Oshiage Onsen Daikokuyu, said: "This was last month’s gas bill at 732,020 yen. About three years ago when a war broke out, our monthly gas bill rose to 1.7 million yen. I’m worried that could happen again."
Although the bathhouse uses gas rather than heavy oil, rising prices have steadily pushed up fuel costs, and the situation in Iran has heightened concerns over further increases in LNG, or liquefied natural gas, prices.
Operators face mounting pressure as bathhouse fees are regulated by law, leaving little room to pass rising fuel costs onto customers.
Shinbo said: "We’ve been cutting costs ever since the business was founded. We’ve reached the point where we don’t know what else we can do."
To ensure stable procurement of crude oil and LNG and minimize the impact on daily life, the Japanese government is accelerating efforts to diversify supply sources, with particular attention on the so-called “Red Sea route,” which transports Middle Eastern crude via pipelines that bypass the Strait of Hormuz and then ships it through the Red Sea to Japan.
However, new risks have emerged. Armed groups have rapidly seized tankers in the region, including Iran-backed Houthi forces in Yemen, which claimed responsibility for attacks on Israel on March 28th and warned that strikes would continue for several days.
If Houthi involvement leads to repeated attacks on vessels in the Red Sea, the alternative route itself could become dysfunctional, raising further concerns over energy security.
Japan began releasing oil from its national reserves last week, with current estimates indicating supplies equivalent to 237 days of consumption remain, but unless the situation in the Strait of Hormuz stabilizes, reserves will continue to decline.
With limited time, the government faces mounting pressure to secure effective countermeasures, as the outlook remains increasingly uncertain.
Source: TBS
