TOKYO, Feb 22, 2011 (AFP) - Japanese Prime Minister Naoto Kan on Tuesday summoned his key ministers for an emergency meeting as oil prices soared to two-year highs amid escalating violence in the Middle East.
The government voiced concern about the impact of the price rises on the budding economic recovery in Japan, which relies on imported oil, 90 percent of which comes from the Middle East.
"It is possible that developments in the Middle East will affect Japan in a number of ways," Kan said before meeting his foreign, finance, trade and other ministers, according to the Kyodo News agency.
Economy, Trade and Industry Minister Banri Kaieda said: "The largest risk that could be a drag on Japan's economic recovery is rising crude oil prices due to the political unrest in the Middle East."
However, he stressed that Japan has "built up reserves and diversified oil suppliers".
And Kaoru Yosano, the state minister in charge of economic and fiscal affairs, said the yen's current strength – it was trading at 112.98 to the dollar in the morning – would cushion the impact and make immediate fuel price hikes unlikely.
Japan buys 30 percent of its crude oil from Saudi Arabia and 25 percent from the United Arab Emirates, and has not purchased oil from Libya in years.
However, concerns over supplies from the region have heightened as pro-democracy protests flare up across the region, with Tunisia and Egypt seeing their leaders toppled while Yemen, Iran and Bahrain have also been hit by unrest.
On oil markets, Brent North Sea crude for delivery in April jumped US$1.21 to US$106.95 per barrel in Asian trade, its highest since late 2008, while New York’s main contract, light sweet crude for March, surged US$6.45 to US$92.65.
The concerns helped push Japanese shares tumbling 1.96 percent in afternoon trade.