Prime Minister Sanae Takaichi directed ministers on Tuesday to maintain subsidies keeping average gasoline prices at approximately 170 yen per liter [1].
The move aims to protect Japanese consumers from inflation and stabilize daily life as volatility in the Middle East continues to drive up global crude oil prices.
Takaichi instructed the Minister of Finance and the Minister of Economy, Trade and Industry to utilize reserve funds specifically designated for Middle East affairs [1]. This policy is a continuation of a subsidy program that first began on March 19, 2026 [1].
"I have decided to continue suppressing the gasoline price to around 170 yen per liter on a national average by utilizing the reserve fund for responding to the situation in the Middle East," Takaichi said [1].
To achieve this target, the administration plans to release oil from national reserves [2]. Takaichi said that fuel costs in Japan remain significantly lower than in other regions, and that Japanese gasoline prices are about half those found in Europe [3].
However, the effectiveness of the price cap has faced scrutiny. While the government targets a 170 yen average [1], some reports indicate that actual prices have already exceeded 180 yen per liter in certain instances [4]. This discrepancy suggests that the subsidies may not be fully offsetting the market surge in all regions.
Critics have also challenged the Prime Minister's comparison to European markets. Some reports argue that with domestic prices climbing above 180 yen [4], it is becoming more difficult to categorize Japanese fuel as significantly cheaper than European alternatives.
“"I have decided to continue suppressing the gasoline price to around 170 yen per liter on a national average,"”
The Japanese government is prioritizing immediate inflation relief over market-driven pricing to prevent a cost-of-living crisis. By relying on reserve funds and oil stockpiles, the administration is attempting to decouple domestic fuel costs from global spikes caused by Middle East instability, though the gap between the 170-yen target and actual market prices suggests a struggle to maintain total control over retail costs.
