Can Japan’s US$10b energy shield oust China’s influence in Southeast Asia?

Japan has pledged US$10 billion to its Asian neighbours in energy support, in what analysts say is a strategic bid to counter China’s regional influence and position itself as a reliable partner as the Iran war upends global oil markets and supply chains.

However, one observer argued that the move’s impact might be limited, given Japan’s inability to alter the ground realities in the Middle East and Southeast Asian countries’ instinct for strategic hedging over picking sides.

Unveiled by Japanese Prime Minister Sanae Takaichi in Tokyo on Wednesday following a meeting with mostly Asean counterparts, the support package offers credit lines to partner nations to diversify their energy sources, boost stockpiles and build storage facilities. It also aims to procure alternatives to stabilise Japan’s supply chain for petroleum-based medical essentials.

The announcement came at a Japan-led Asia Zero-Emission Community online forum attended by the leaders of Thailand, Vietnam, the Philippines and Malaysia, among others.

Takaichi said the support would cover the equivalent of 1.2 billion barrels of oil, matching about a full year of total crude imports by the Association of Southeast Asian Nations.

Crude prices have surged again after failed US-Iran talks to reopen the Strait of Hormuz, a situation worsened by the US naval blockade of Iranian ports.

South China Morning Post