Japan PM says oil crisis has 'enormous impact' in Asia-Pacific

CANBERRA: A global oil supply squeeze is inflicting an "enormous impact" on the Asia-Pacific region, Japanese Prime Minister Sanae Takaichi said on Monday (May 4).

Speaking in Canberra after talks with Australian Prime Minister Anthony Albanese, she said the two countries would respond urgently to secure stable energy supplies.

Roughly one-fifth of the world's oil normally flows through the Strait of Hormuz, where shipping has been throttled by Iran since it was attacked by the United States and Israel.

Eighty per cent of that oil is destined for Asia, according to the International Energy Agency.

"The effective closure of the Strait of Hormuz has been inflicting enormous impact on the Indo-Pacific," the Japanese leader told journalists.

"We affirmed that Japan and Australia will closely communicate with each other in responding with a sense of urgency."

The two countries aim to strengthen autonomy and resilience to secure stable supplies of energy, Takaichi said.

Australia is the biggest supplier of liquefied natural gas to Japan, which in turn is a source for about 7 per cent of Australia's diesel.

ENERGY AND CRITICAL MINERALS AGREEMENTS

The two countries agreed on Monday to deepen cooperation on energy and critical minerals, as Takaichi met Albanese during her three-day visit to Australia.

The agreements to strengthen energy, food and critical minerals supply chains come after the two nations signed a landmark defence deal last month.

"Australia and Japan are taking action to protect our economies from future economic shocks and uncertainty," Albanese said in a statement.

"By working together, we will achieve more secure and resilient supply chains that will benefit Australian and Japanese businesses and consumers now and into the future," he said.

Japanese firms have been closely watching developments in the Australian liquefied natural gas industry, from the risk of strikes at a major gas facility and rising political pressure to increase taxes on exports.

"Like Japan, we are very concerned by disruptions to the supply of liquid fuels and refined petroleum products," Albanese said.

Australia also plans to provide support of up to A$1.3 billion (US$937 million) to critical mineral projects with Japanese involvement, creating the potential to supply Japan with resources including gallium, nickel, graphite, rare earths and fluorite.

Takaichi arrived in Australia from Vietnam, where she discussed energy and critical minerals and urged Southeast Asian nations to bolster regional supply chains.

Last month, Japan signed contracts launching a A$10 billion deal to supply Australia ​with warships in Tokyo's most significant military sale since ‌ending a ban on such exports in 2014.