Why Japan's Nikkei index fell on Thursday
Japan's Nikkei index fell 1.3% on Thursday after oil prices spiked nearly 5%.
The cause? Fears that the vital Strait of Hormuz (key for about 20% of the world's oil) could be closed off, not by a physical blockade, but because insurance companies are backing out and risks are rising.
Japan's oil dependency and potential recession risks
Japan gets almost all its oil from the Middle East, so any hiccup in supply means higher energy costs and more expensive daily life.
If disruptions persist beyond about 30 days, experts warn major importing economies could face recession risk, and oil prices could rise into a $100-$200-per-barrel range;
Japan, which gets almost all its oil from the Middle East, would be particularly exposed.
Global supply chain disruptions and rising costs
It's not just Japan: global supply chains are feeling it too. Major shipping lines have paused trips through the Strait, slowing down deliveries worldwide.
Asia is especially vulnerable since much of its natural gas also travels this route, which could mean pricier utilities and tighter business margins across the region.