Japan had a small domestic oil production, a few million barrels, but not nearly enough to meet their peacetime needs let alone war. What they did have is enough oil refineries with a capacity of almost a year's peacetime consumption. If they could get the oil to Japan, they could refine it into fuel. They were also heavily invested in synthetic oil plants to convert coal, tar and shale into oil.
Before the war started, they imported 90% of their oil, mostly from the US. The US produced the majority of the world's oil in 1941, a lot of it in California. Not having the infrastructure to ship it across the US, it was loaded onto tankers and sold around the Pacific Rim. Months before the war began this supply was cut off by a US embargo, later joined by the Dutch. By threatening the US and the Dutch they cut off their oil supply.
Japan also had a stockpile of oil and other strategic resources, billions of barrels. Roughly equal to two years of peacetime imports. They would need it.
Japan imported most of its oil from conquered territories, primarily the Dutch East Indies (aka Indonesia) but also smaller amounts came from Formosa (Taiwan), China, and Burma. Many of these plants and fields were damaged by their defenders and it took years to get them back to near full production. The USSR also continued trading oil with Japan. But it never was enough. Without US oil, their imports were slashed in half.
All that oil had to be shipped to refineries and the products to where it was needed by an ill-defended merchant fleet. Japan would be further crippled by the loss of most of this fleet to American and Allied submarines, aircraft and mines.
The Navy was a huge consumer of oil, needing a billion barrels of heavy oil a year. Military and civilians needed half a billion barrels of diesel. Aviation took another half billion barrels. As oil imports plummeted and stockpiles were depleted, the heavy units of the Japanese navy were more and more often confined to port and their aircraft grounded. Training programs were cut, the fuel could not be afforded for the hours necessary to train pilots and crew, and the initially high quality of Japanese naval personal and pilots plummeted.
- The Pacific War Online Encyclopedia: Oil
- Empire of Japan database: Oil
- The Way To Pearl Harbor: US vs Japan by Yuichi Arima
- Japan's need for oil and the Embargo (1940-1941)
- Empire of Japan (economic and financial data): Natural Resources in occupied areas after 1937
- Choke Hold: The Attack On Japanese Oil in WWII by Stephen L. Wolborsky. Specifically Chapter 2, "The Campaign Against Japanese Oil".