Fuel Oil Price Mitigation Programme

Japan’s Fuel Oil Price Mitigation Programme provides subsidies to fuel wholesalers and importers to limit increases in retail prices of gasoline, diesel, kerosene, heavy fuel oil and aviation fuel. Introduced in January 2022, the scheme initially provided subsidies of up to approximately ¥5/L when gasoline prices exceeded a benchmark of around ¥170/L, before being expanded in 2022 with subsidy caps raised to around ¥25-35/L as global oil prices surged. The programme was repeatedly extended through 2023-2025 with adjustments to subsidy ceilings and trigger mechanisms to stabilise retail prices. In March 2026, in response to supply disruptions linked to instability in the Strait of Hormuz, the scheme was significantly scaled up through a fixed-price reduction mechanism, with subsidies reaching up to ¥48.1/L for gasoline and ¥65.2/L for diesel, alongside additional government funding of approximately ¥800 billion to mitigate price spikes and protect households and businesses.

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