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Supporting note · AI x Energy

India and Japan: The Most Exposed Major Economies

India and Japan face simultaneous manufacturing and energy crises as Hormuz disruptions cut Middle East crude supplies. India scrambles for alternatives as Russian oil waivers expire, while Japan reverts to coal and deepens US energy partnerships.

Apr 19, 2026 · 4 min read

Summary

The earlier case that India is the most vulnerable major economy is partially confirmed. India has lost roughly 3 million barrels/day of crude that previously transited Hormuz and is scrambling for alternatives, particularly from Russia. The US waiver allowing countries to buy Russian crude expired April 11, compounding the problem. Meanwhile Japan - which depends on Hormuz for 95% of its Middle East crude imports and imports >90% of its crude from the region - authorized older coal-fired generation to operate for a 12-month emergency period starting April 2026. Both economies face manufacturing and consumer disruption simultaneously.

India

  • ~3 million bbl/day of Hormuz-transit crude disrupted
  • Refiners pivoting to Russian Urals supply
  • Russian oil waiver expired April 11, 2026 (coincident with blockade)
  • LPG crisis: 60% of India’s cooking fuel imported, most via Hormuz
  • Long queues and delayed deliveries for household LPG
  • Rupee pressure from higher oil import bill
  • Inflation and growth threat intensifying

Japan

  • 95% of Japanese Middle East crude transits Hormuz
  • >90% of Japanese crude imports come from Middle East
  • Manufacturing ecosystem facing breakdown in multiple sectors
  • Government authorized older, less-efficient coal-fired plants to run for 12-month emergency period starting April 2026
  • US-Japan energy partnership deepens: Alaskan oil JV, expanded LNG export targeting Pacific

Asia Aggregate

China + India + Japan + South Korea = 75% of oil and 59% of LNG exports from the Middle East region. The blockade is an Asian problem before it is a European one.

Sources:

Conclusions

Asia is the demand center for oil and LNG. When the Middle East is disrupted and Asia can’t pivot to US cargoes fast enough, the global price signal transmits directly to US LNG exporters - they absorb the premium.

India’s situation is the most politically acute. Cooking fuel (LPG) shortages hit households directly and quickly, unlike industrial diesel or jet fuel. The coincidence of the Russian waiver expiring during the Hormuz blockade is either extraordinarily bad timing or deliberate US pressure; either way it forces India toward accelerated bilateral energy deals with the US, potentially at the cost of the country’s strategic autonomy posture.

Japan’s 12-month coal emergency authorization is the opposite of the decarbonization storyline the country has been telling for a decade. It tacitly acknowledges that energy security now trumps climate targets during acute crises. This will echo in European emergency measures.

Our Thinking

The Asian angle is the underreported half of the energy-and-AI story. Every projection of US LNG capacity, every Cheniere / Venture Global / Sempra expansion, every Louisiana or Texas export terminal is now operating in a world where Asian buyers have no real alternative. US LNG exports will run at near-maximum capacity through the summer.

Japan’s coal emergency authorization also matters for our gas turbine story: Japanese utilities that had paused CCGT procurement for coal-to-gas transitions may accelerate gas turbine orders to reduce coal restart need. Mitsubishi Power is the natural beneficiary. Expect Japanese utility CCGT announcements over the next 60-90 days.

For India: the structural bet by Indian refiners on Russian supply, combined with US waiver expiration, creates a diplomatic pressure point that probably ends with a large US-India LNG / crude deal in exchange for geopolitical alignment. Watch for an Indian PM Modi - Trump bilateral energy announcement.

Watch

  • Indian LPG import diversification announcements (Qatar alt? Africa? US LPG exports?)
  • Japan: how quickly older coal plants ramp, and whether new CCGT orders are announced
  • US LNG cargo diversion Europe → Asia spread
  • India-US bilateral energy trade announcements
  • Rupee and Japanese yen moves as leading indicators of current account stress
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← AI x Energy
Supporting note · AI x Energy

India and Japan: The Most Exposed Major Economies

India and Japan face simultaneous manufacturing and energy crises as Hormuz disruptions cut Middle East crude supplies. India scrambles for alternatives as Russian oil waivers expire, while Japan reverts to coal and deepens US energy partnerships.

Apr 19, 2026 · 4 min read

Summary

The earlier case that India is the most vulnerable major economy is partially confirmed. India has lost roughly 3 million barrels/day of crude that previously transited Hormuz and is scrambling for alternatives, particularly from Russia. The US waiver allowing countries to buy Russian crude expired April 11, compounding the problem. Meanwhile Japan - which depends on Hormuz for 95% of its Middle East crude imports and imports >90% of its crude from the region - authorized older coal-fired generation to operate for a 12-month emergency period starting April 2026. Both economies face manufacturing and consumer disruption simultaneously.

India

Japan

Asia Aggregate

China + India + Japan + South Korea = 75% of oil and 59% of LNG exports from the Middle East region. The blockade is an Asian problem before it is a European one.

Sources:

Conclusions

Asia is the demand center for oil and LNG. When the Middle East is disrupted and Asia can’t pivot to US cargoes fast enough, the global price signal transmits directly to US LNG exporters - they absorb the premium.

India’s situation is the most politically acute. Cooking fuel (LPG) shortages hit households directly and quickly, unlike industrial diesel or jet fuel. The coincidence of the Russian waiver expiring during the Hormuz blockade is either extraordinarily bad timing or deliberate US pressure; either way it forces India toward accelerated bilateral energy deals with the US, potentially at the cost of the country’s strategic autonomy posture.

Japan’s 12-month coal emergency authorization is the opposite of the decarbonization storyline the country has been telling for a decade. It tacitly acknowledges that energy security now trumps climate targets during acute crises. This will echo in European emergency measures.

Our Thinking

The Asian angle is the underreported half of the energy-and-AI story. Every projection of US LNG capacity, every Cheniere / Venture Global / Sempra expansion, every Louisiana or Texas export terminal is now operating in a world where Asian buyers have no real alternative. US LNG exports will run at near-maximum capacity through the summer.

Japan’s coal emergency authorization also matters for our gas turbine story: Japanese utilities that had paused CCGT procurement for coal-to-gas transitions may accelerate gas turbine orders to reduce coal restart need. Mitsubishi Power is the natural beneficiary. Expect Japanese utility CCGT announcements over the next 60-90 days.

For India: the structural bet by Indian refiners on Russian supply, combined with US waiver expiration, creates a diplomatic pressure point that probably ends with a large US-India LNG / crude deal in exchange for geopolitical alignment. Watch for an Indian PM Modi - Trump bilateral energy announcement.

Watch