Japan Naptha Hits $110 per Barrel with Shortages in East Asia

A shortage of naphtha, stemming from the blockade of the Strait of Hormuz, is disrupting manufacturing and retail goods in Japan and South Korea.

· Countries in East Asia are facing a growing shortage of naphtha, a petroleum derivative widely used in plastics, inks, solvents, synthetic rubber, medical devices and industrial manufacturing.

· The shortage has emerged as one of the first major industrial disruptions caused by the prolonged closure of the Strait of Hormuz.

Why Naphtha Is Critical

· Naphtha is refined from crude oil and serves as a key feedstock for petrochemicals.

· It is often referred to as the “flour” or “rice” of industry because it is used in manufacturing a vast range of products.

Heavy Dependence on Middle East Supplies

· Japan and South Korea depend heavily on naphtha imports from Qatar and Kuwait.

· Much of Asia’s domestically refined naphtha also depends on crude oil transported through the Strait of Hormuz.

· More than 80% of Japan’s traditional naphtha supply chain has reportedly been disrupted due to the blockade.

Impact on Japan

Japanese companies are taking emergency measures to conserve supplies:

· Food companies including:

o Calbee

o Kagome

have redesigned packaging to reduce ink usage.

· Supermarkets are facing shortages of:

o Plastic wrap

o Packaging materials

o Daily-use plastic products

· Diaper manufacturers are increasing prices.

· Construction projects are being delayed due to shortages of:

o Housing equipment

o Naphtha-derived resins

o Industrial materials

Impact on South Korea

· South Korean petrochemical companies have reduced production rates due to insufficient feedstock supplies.

· Some chemical manufacturers have declared force majeure on deliveries to:

o Automotive companies

o Electronics manufacturers

· Reports have also emerged of consumers hoarding plastic bags and daily-use items.

Concerns Over Medical Supply Chains

· Industry experts warn shortages could spread into sensitive sectors such as medical equipment manufacturing.

· Medical-grade plastics are difficult to substitute and require strict specifications.

· Patient and physician groups in Japan have requested government action to identify vulnerable medical supply chains.

Governments Seeking Alternative Supplies

South Korea

· South Korea has increased naphtha imports from Russia.

Japan

· Japan has sought alternative supplies from the United States.

· Japanese authorities insist sufficient volumes are being secured, though companies continue warning of shortages.

Sharp Decline in Japanese Imports

· Japan’s naphtha imports reportedly fell 79% year-on-year in April according to finance ministry data.

· Analysts warn more companies could enter a “red zone” of production disruptions by June if the situation continues.

Political and Economic Fallout

· Public anxiety over shortages is increasing in Japan.

· Approval ratings for Prime Minister Sanae Takaichi reportedly declined sharply in recent polling.

· Around 70% of respondents expressed concern over the effect of naphtha shortages on daily life.

Broader Significance

· The crisis demonstrates how disruptions in the Strait of Hormuz are affecting not only oil markets but also global manufacturing supply chains.

· The shortages highlight East Asia’s dependence on Middle Eastern energy and petrochemical supplies.

· Prolonged disruptions could affect:

o Consumer goods production

o Automotive manufacturing

o Electronics supply chains

o Medical equipment availability

o Construction activity

· Experts believe long-term recovery depends heavily on restoring safe commercial shipping through the Strait of Hormuz.

[ABS News Service/25.05.2026]

Countries in Asia are reeling from a shortage of naphtha, a petroleum derivative used in a dizzying array of products, from household plastic wrap to industrial inks and medical devices.

Early global alarm over the war in the Middle East centered on skyrocketing crude prices and gasoline spikes at the pump. But in East Asia, naphtha has emerged as the first major industrial disruption.

Japan and South Korea rely heavily on naphtha imported from Qatar and Kuwait, which are unable to export because of the more than two-month-long blockade of the Strait of Hormuz. Even the naphtha processed by Asian refineries often comes from crude shipped through the strait.

The economic fallout is already visible. In Japan, consumer goods companies unable to secure a stable supply of naphtha are stripping colors from food packaging to conserve ink. Both Japan and South Korea are scrambling to secure alternative supplies ahead of June, the point at which some industry experts warn shortages could begin to affect manufacturing more broadly.

In East Asia, naphtha “is the principal mechanism through which supply shocks from the Middle East are already transmitting throughout the economy,” said Toby Whittington, a lead economist at the advisory firm Oxford Economics. “It feeds into everything,” he said. “That’s why this is beginning to hit economies so hard.”

What is naphtha, and why is it in short supply?

Naphtha is a petroleum product refined from crude oil, which is boiled and separated into distinct liquid layers. When blasted with extreme heat, naphtha breaks down into the foundational petrochemicals used in everything from plastics and synthetic rubbers to specialized inks and solvents.

Because it serves as the building block for so many chemical products, naphtha is often called the “flour” or “rice” of industry.

In Asia, naphtha supply chains have long been dependent on the Middle East. Japan imports most of its naphtha, and three-fourths of those imports originate from Middle Eastern producers. The naphtha that Japan produces domestically is derived from crude oil, more than 90 percent of which comes from the Middle East.

That means that since the war choked off shipping lanes through the Persian Gulf and halted exports from crucial regional ports, more than 80 percent of Japan’s traditional supply lines for finished naphtha products have been abruptly severed. This leaves Japan and South Korea as the countries most exposed to the current supply disruptions, according to Oxford Economics.

What problems are the shortages causing?

In Japan, companies are doing everything they can to ration supplies that they warn could dwindle in the coming months. Major food conglomerates, including the snack manufacturer Calbee and the ketchup maker Kagome, have begun redesigning their packaging to use less ink, resulting in new, noticeably muted designs.

Some supermarkets are reporting shortages of everyday items like plastic wrap. Diaper producers are raising prices, and some construction projects are being delayed because builders cannot obtain housing equipment and construction materials, such as naphtha-derived resins.

In South Korea, petrochemical giants have been forced to slash operating rates. Unable to honor delivery commitments without naphtha feedstock, some chemical producers have declared force majeure on shipments to major automotive and electronics manufacturers. There have also been reports of consumers hoarding daily goods like plastic bags.

The deeper concern is that the shortages will bleed into more sensitive industries, such as medical gear. Unlike consumer packaging, medical-grade plastics cannot easily be substituted or scaled down. In Japan last month, several patient and physician groups submitted a joint request to the country’s health ministry, urging officials to identify which medical equipment supply lines are most at risk.

What are countries doing to cope?

Faced with growing anxiety, governments in Asia have sought to project stability while racing to line up alternative shipments from outside the Middle East.

South Korea has increased naphtha imports from Russia, while Japan has turned to the United States. At the same time, Japanese officials maintain that the necessary volumes have been secured and that reported supply disruptions merely reflect bottlenecks in the domestic distribution network.

But with a growing number of companies warning of impending shortages, the public appears unconvinced. In Japan, the approval rating for Prime Minister Sanae Takaichi’s cabinet fell sharply in a recent Kyodo News poll, with 70 percent of respondents expressing concern about the impact of disrupted naphtha supplies on daily life.

Haruhiko Sakaino, an adviser to Japan’s Agency for Natural Resources and Energy, said there is little evidence so far that Japan has secured sufficient alternative supplies of naphtha amid an intensifying global bidding war. In April, Japan’s naphtha imports fell 79 percent from a year earlier, according to data released by the Japanese finance ministry on Thursday.

If current conditions persist, the number of companies entering the “red zone” of production disruptions is likely to spike by June, said Mr. Sakaino, a former oil-refining official. For now, he said, “I don’t see any other way to recover from Japan’s current situation except by securing safe passage through the Strait of Hormuz.”