A very close look at the quantities of critical materials imported vs consumption. should give a clue. This includes the items stockpiled before the war, including oil.
OTL the IJN was deploying ships cautiously on combat ops as early as October 1942. They were husbanding their refining ships fuel reserves for the big decisive naval battle they thought necessary. At least one writer has claimed the Midway operation depleted the naval fuel reserves on Truk & in the home Islands below what could be replenished that year. I don't know what the production in the DEI was during mid to late 1942, but Japans ability to transport the crude or refined oil was limited. At the end of 1941 they had a total of slightly over sixty oil transport ships, and barely 40 of those were modern blue water tankers. That combined with the sabotage of the Dutch oil extraction and refinery industry suggests not much was made available in 1942.
A trickle of new tankers became available in early 1943 & the production in DEI was ramping up, but reserves in Japan continued to decline. This was offset by a program to convert a portion of Japans industry back to coal fuel, which was better available from Korea/Manchuria.
As a wild guess, if no DEI oil is available then it seriously bites in mid 43 when the stockpiled reserves are gone.
... but would the Japanese just decide to turtle on all of their islands and dare the Anglo-Americans to sacrifice lives to take them out?
The Japanese defense in the Pacific was as it turned out but not their intent. Their defense plan depended of a active and effective fleet to counter attack. My take is they leaders understood a passive defense would not work. They had it forced on them & went with it out of stupidity brought on by desperation.