Japan and Saudi Arabia have agreed to establish an alternative oil supply route through the Red Sea, bypassing the Strait of Hormuz, Kyodo reported on April 23, citing government sources.

The agreement was reached during a telephone call between Japanese Prime Minister Sanae Takaichi and Saudi Crown Prince Mohammed bin Salman, TASS reported, citing the Kyodo report.

The deal formalises one of several alternative supply arrangements Tokyo has been pursuing since the effective closure of the Strait of Hormuz during the US-Iran conflict sent global energy prices soaring. The Red Sea route would use Saudi Arabia's western port of Yanbu al-Bahr, which sits outside the chokepoint.

Japanese media have reported that the government believes it can meet domestic oil demand in full at least through the end of 2026 through a combination of alternative supply routes and releases from strategic reserves.

The alternative routes include shipments from the UAE through the port of Fujairah, on the Gulf of Oman side of the strait, and from Saudi Arabia through Yanbu.

Each country can supply roughly half of Japan's domestic oil needs, according to the reports.

The US has also indicated it can increase oil shipments to Japan by four times year-on-year volumes, primarily from terminals in Texas. Additional supplies are expected from Azerbaijan.

Japan began releasing oil from strategic reserves in mid-March, with volumes sufficient to cover 45 days of domestic consumption entering the market at prices pegged to pre-conflict levels. Japan's total strategic petroleum reserves stand at roughly 470mn barrels, equivalent to 254 days of domestic consumption.

The agreement underlines the extent to which the Hormuz closure is reshaping global oil logistics. Saudi Arabia's ability to export through both Gulf and Red Sea ports gives it a significant advantage over other Gulf producers whose infrastructure is entirely dependent on the strait.