How did the 1973–74 oil embargo affect Japan’s economy?

The 1973–74 oil embargo significantly disrupted the Japanese economy, which was heavily dependent on Middle Eastern oil. The resulting rapid increase in energy prices ended an era of relatively cheap and abundant energy resources, leading to economic recessions.1

The crisis highlighted the essential fragility of Japan’s economic position and its vulnerability regarding fuel and food imports. In response, the country experienced outbreaks of panic buying and a growing sense of insecurity among the public regarding Japan's place in the global economy.1

To mitigate these vulnerabilities, Japan took several strategic steps:
* Diversification: The country sought to diversify its markets and sources of raw materials.1
* Energy Policy: Japan promoted free trade and aimed for greater energy self-sufficiency by increasing its use of nuclear power.1
* Export Strategy: During the 1970s, exports were viewed as vital to balancing the deficits caused by rising oil prices. As the economy weathered the recessions, the volume of exports—particularly automobiles and electronic products—accelerated, leading to mounting trade surpluses.1