Oil volatility tops earnings risk for 37% of Japanese firms, Reuters poll finds

The survey underlines Japan's strong vulnerability to the Iran conflict: nearly all its crude imports come from the Middle East, so any fresh disruption to Gulf shipping — such as the tanker attack north of Qatar this week — directly affects corporate costs and profit margins. That leaves energy-intensive industries like materials, chemicals, cement and transport most exposed if crude prices remain high, while higher fuel import bills also put downward pressure on the yen. If earnings downgrades become more common in the second half, Japanese stocks could suffer during the results season, especially if oil stays elevated and the Bank of Japan continues tightening. Uncertainty about how long AI spending will last also suggests downside risk for chip-equipment and data-centre suppliers that have driven the market.

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Japan Inc's leading concern is no longer the yen or the Bank of Japan but oil prices, and that worry is beginning to dim the profit outlook for the rest of the fiscal year.

• Roughly 37% of Japanese companies cited crude oil market volatility as the main threat to earnings, ahead of foreign-exchange moves (21%) and higher interest rates (19%), according to a Reuters survey
• The Iran war, which started on 28 February, has tightened crude supply and driven up energy and oil-product costs; Japan got 94% of its crude imports from the Middle East in 2025
• Several firms also expressed doubts about how long AI-related investment will persist
• For the April-to-September half, 32% anticipate net earnings will exceed their own forecasts, while 22% expect a shortfall
• For the October-to-March half, the outlook turns more cautious: 22% expect to fall short and 20% expect to beat projections
• The poll of 215 firms was carried out by Nikkei Research for Reuters from 18 September to 2 October

Global oil market volatility has become the biggest threat to Japanese corporate earnings, ahead of currency swings and rising interest rates, a Reuters survey showed on Thursday.

Some 37% of respondents named crude market volatility as the top risk to their earnings outlook, while 21% pointed to foreign-exchange moves and 19% to higher interest rates. Nikkei Research conducted the poll for Reuters between 18 September and 2 October; 215 of the 508 companies approached replied on condition of anonymity.

The concern stems from Japan's heavy dependence on imported energy. In 2025 the country sourced 94% of its crude oil imports from the Middle East, and the US-Israeli war on Iran — which began on 28 February — has tightened supply and raised prices for energy and numerous oil-based products, including auto parts and construction materials. A manager in the ceramics sector said rising energy costs, along with investment cutbacks that are cooling domestic cement demand as rates climb, were the main risks facing the business.

Higher borrowing costs are becoming a bigger theme. Last month the Bank of Japan raised rates to a 31-year high, and Governor Kazuo Ueda indicated the central bank had entered a new phase focused on preventing inflation from overshooting its target, leaving scope for further increases. A real-estate executive said higher rates would inevitably slow property demand.

Several respondents also flagged uncertainty about how long AI-related investment will last — investment that has fuelled demand for advanced chips and a rapid build-out of data centres. One machinery maker said companies must gauge how sustained the AI-driven boost to demand will be and when it might start to taper off. A Tokyo-based think tank said last month that AI investment is likely to expand over the medium to long term, but power constraints, tighter regulation and rising costs could slow its pace.

Near-term results look more stable than the outlook beyond them. For the April-to-September half, 32% of firms expect net earnings to beat their own forecasts, 22% expect to miss and 46% see results in line. For the October-to-March period, however, 22% expect to fall short — slightly more than the 20% expecting to beat — while 58% see their initial projections as holding. Half-year earnings reports begin later this month and run into November, giving the first indication of how far energy costs are squeezing margins.