The Impact of Large-Scale Military Operations Against Iran

Japan’s Crude Oil and LNG Procurement

Following the large-scale military operation conducted by the United States and Israel against Iran on February 28, 2026, the Strait of Hormuz has effectively been blockaded. Since approximately 90% of Japan's crude oil imports pass through this strait (*1), procurement risk has risen sharply. With Japan's energy self-sufficiency ratio at only around 15% (*2) and heavy dependence on imports, serious economic and social disruption is a significant concern. Japan's petroleum stockpile was estimated to cover approximately 237 days of domestic demand as of end-March 2026 (*3), but a prolonged situation raises the risk of stockpile depletion.

LNG procurement has a different structure: roughly 40% of Japan's LNG imports come from Australia, with Middle East dependence at less than 10% (*1) — considerably lower than for crude oil. That said, Iranian drone strikes have severely damaged Qatar's LNG production capacity, with restoration expected to take several years, which is likely to tighten global LNG supply-demand conditions significantly.

Procurement Risks Spreading Beyond Energy

What this situation has thrown into sharp relief is a serious problem of materials and commodity procurement risk that extends well beyond energy. The most immediate concern is a shortage of naphtha derived from crude oil. As the fundamental feedstock for chemical products, a naphtha shortage would ripple through virtually all productive activity.

Procurement concerns are also rising for materials that rarely attract public attention. A prime example is helium. Produced as a byproduct of LNG refining, Qatar accounts for approximately 36% of global helium supply (*4). Helium is indispensable as a coolant gas in semiconductor manufacturing processes, yet because it lacks the visibility of crude oil and has not been weaponized as a diplomatic lever the way rare earths have, its procurement risk has largely gone unnoticed outside specialist circles. Similarly, bromine — used in etching processes — shares a high degree of Middle East dependence, with over 70% of global production concentrated in the region (*5), raising concerns about supply disruption risk from geographic concentration. Helium and bromine are just two examples; going forward, comparable "hidden procurement risks" may emerge across other process gases and specialty materials.

In response to these risks, recycling programs for helium and similar materials have already been advancing at the operational level in the semiconductor industry and elsewhere, aimed at securing stable supply. Companies that have invested proactively in recycling in the past are presumed to be maintaining relatively stronger procurement capacity even in the current crisis. When evaluating companies as investors, it is important not to view recycling solely as an environmental initiative, but to recognize that it can translate into competitive advantage through supply chain resilience.

Supply Chain Risk Assessment

The impact of energy procurement difficulties varies considerably by sector. Petrochemicals, materials, transportation, and energy-intensive industries such as steel, aluminum, and cement face direct pressure on profitability from rising raw material and fuel costs. Across manufacturing more broadly, rising energy costs feed through to production costs, and industries that struggle to pass these on to customers face unavoidable margin compression.

In industries with long and complex manufacturing processes, procurement risks for these materials lurk at every stage of the production process, making the full scope of the impact difficult to assess. Semiconductors are the clearest example, but automotive, aerospace, machinery, and robotics industries share a similar structure. In these sectors, lead times from raw material procurement through processing, assembly, and quality verification can span several months to over a year. If supply of a specific material is interrupted mid-process, companies may be forced to procure costly substitutes regardless of economics — and in the worst case, face production shutdowns.

Investment Preferences in an Environment of Elevated Procurement Risk

The energy procurement challenge will alter corporate procurement and investment behavior. One scenario to consider is an increase in companies actively exploring energy efficiency improvements and renewable energy adoption. In Japan, the GX-ETS emissions trading scheme entered full operation in April 2026. Additionally, large companies with market capitalizations of ¥3 trillion or above are now required — from the fiscal year beginning in April — to report under SSBJ (*7) standards, Japan's localized implementation of ISSB (*6) frameworks. These sustainability requirements create additional incentives to reduce greenhouse gas emissions, and when combined with the straightforward economic rationale of lower energy costs, the case for proactive investment in energy efficiency and renewables becomes increasingly compelling. In corporate analysis, it is becoming necessary to re-examine supply chain length and concentration of procurement dependence on specific materials or geographies, and to incorporate risk scenarios explicitly into investment decisions. Conversely, non-manufacturing sectors such as services, and manufacturing industries with high essential-goods status that are likely to receive priority materials allocation — such as healthcare — may attract growing investor interest given their relatively more stable earnings outlook.

*1 https://www.enecho.meti.go.jp/about/energytrends/202506/html/s-1-3.html

*2 https://www.meti.go.jp/press/2024/11/20241122001/20241122001.html

*3 https://www.enecho.meti.go.jp/statistics/petroleum_and_lpgas/pl001/

*4 https://pubs.usgs.gov/periodicals/mcs2025/mcs2025-helium.pdf

*5 https://pubs.usgs.gov/periodicals/mcs2024/mcs2024-bromine.pdf

*6 ISSB: International Sustainability Standards Board

*7 SSBJ: Sustainability Standards Board of Japan