Price of Middle East Crude Set to Stay High; Increased Costs Put Pressure on Public, Government Alike

By Daisuke Ichikawa / Yomiuri Shimbun Correspondent

15:04 JST, April 9, 2026

LONDON — With tensions still high in the Middle East, the cost of oil from the region also remains at elevated levels — a major headache for Japan, which relies on the Middle East for more than 90% of its crude oil imports.

Dubai Crude, a price indicator for Middle East oil exports to Asia, remains well above the prices of the United States’ West Texas Intermediate and Europe’s Brent Crude benchmarks. Some observers are concerned about potential inflation in Japan as a result, as well as a deterioration in government finances due to the payment of subsidies to keep a lid on gas prices at the pump.

Crude oil has different trading price indicators depending on the region from which it is sourced. Oil-producing nations in the Middle East use the United Arab Emirates’ Dubai Crude benchmark when exporting oil to Asia. Dubai Crude has become a major international benchmark along with West Texas Intermediate, which is used for crude primarily produced in the U.S. state of Texas, and Brent, which is used for crude from oil fields in the North Sea.

During peacetime, fluctuations in these three benchmarks move in tandem to some degree, and there is little difference in their prices. However, the escalating conflict in the Middle East resulted in the Strait of Hormuz, a critical passageway for exports of crude produced in that region, being essentially closed. The vast majority of crude oil exports have been blocked, and with demand greatly outstripping supply, the price of Dubai Crude skyrocketed.

Dubai Crude spot prices were about $70 per barrel in late February, before the United States and Israel attacked Iran and Tehran responded with attacks against countries across the Middle East. This price topped $170 at one point in mid-March. One barrel holds about 159 liters. Although prices for WTI and Brent also soared during that period, Dubai was about $60 to $70 more expensive than both.

The announcement that Washington and Tehran had agreed to a ceasefire restored some calm to the oil markets Wednesday and prices fell between 10% and 20%. Despite this, Dubai Crude was still trading at about $100 per barrel, which was about $5 to $10 more expensive than WTI and Brent.

Pressure on govt coffers

The price of Saudi Arabian oil, which accounted for about 50% of Japan’s imports in February, also has climbed. On Monday, state-owned oil company Saudi Aramco decided to raise the selling price of Saudi crude that would go to Asia in May to a record-high premium of $19.50 per barrel above the average price of Dubai and Omani benchmarks.

This figure is based on factors including supply and demand at the average price, and the premium is usually about $1 to $2. The premium was $2.50 for April, so Saudi Aramco’s plan for next month represents an extraordinary eightfold increase.

The annual value of Japan’s crude oil imports is about ¥10 trillion. Consequently, surging prices of oil from the Middle East place a severe financial burden on the nation.

Crude is used to make fuels such as gasoline and diesel, and is also a material for producing chemicals. The higher cost of oil has sparked concerns that prices for a wide range of products could rise; it also could lead to an economic slowdown as inflation rises and companies grapple with soaring costs.

On March 19, the government began subsidies intended to keep the national average price of gasoline at about ¥170 per liter in a bid to ease the pressure on household budgets. But if crude oil prices remain high, government finances also will feel the squeeze.

Dubai Crude is denser than WTI and Brent oil, which are lighter and easier to refine into gasoline and diesel. Consequently, Dubai has tended to be slightly cheaper but involves higher refining costs.

“If Dubai Crude prices stay high, it’s possible that inflation could increase further and this might lead to ballooning government subsidies,” said Yoshiki Shinke, senior executive economist at the Daiichi Life Research Institute Co. “Dubai Crude requires close attention, given its potential impact on Japan’s economy.”