Japan's July Imports Hit Record High on Energy Costs, Weak Yen

Japan's imports surged to a record high in July, driven by soaring energy costs and a weaker yen, pushing the country's trade deficit to 634.5 billion yen ($4 billion) and marking the third consecutive month of red ink. The Ministry of Finance data released Thursday showed total imports jumped 27.8% year-on-year to 12.1 trillion yen, while exports also climbed to an all-time high of 11.5 trillion yen, up 23.2%.

The primary driver of the import surge was elevated global oil prices, with the value of petroleum imports soaring 87.8% from a year earlier. This reflects both a recovery in crude oil import volumes, which rose 5.5% as Japan secured alternative supplies, and persistently high prices. The country has been urgently diversifying its energy sources since the U.S.-Israel conflict with Iran began in late February, which disrupted shipments through the Strait of Hormuz. Japan previously sourced about 90% of its crude oil from the Middle East but has since turned to suppliers including the United States, Nigeria, Angola, and Canada.

"The recovery in crude volumes, combined with persistently high oil prices and larger shipments of pricier U.S. crude, has been pushing up the value...