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Japan to Tap Oil Reserves Monday Amid Mideast Conflict, Price Fears

Japanese Prime Minister Sanae Takaichi announced the country will begin drawing down its oil reserves as early as next Monday to preempt rising fuel prices and supply disruptions. This marks the first time Japan will release government-held oil stocks unilaterally, outside of an International Energy Agency-coordinated action, since its reserve program began in 1978. The decision is driven by Japan's heavy reliance on West Asian oil and fears that conflict-related closures of the Strait of Hormuz could severely impact imports. The government plans to use a fund to try to cap retail gasoline prices around 170 yen per liter.

Key Points: Japan to Release Oil Reserves Early Over Mideast Conflict

  • First unilateral govt reserve release since 1978
  • Aims to keep gasoline near 170 yen/liter
  • Imports over 90% of oil from West Asia
  • Strait of Hormuz closure is a major risk
  • Holds 254 days worth of oil reserves
3 min read

Japan to begin drawing down oil reserves as early as Monday: PM Takaichi

Japan will unilaterally release oil reserves starting Monday to stabilize gasoline prices, fearing supply disruption from the West Asia conflict.

"We will flexibly review the support measures to ensure continuous relief for the public even if the (Middle Eastern) situation is prolonged. - Sanae Takaichi"

Tokyo, March 11

Japanese Prime Minister Sanae Takaichi on Wednesday announced that Japan will start releasing its oil reserves as early as next Monday to tackle a possible increase in prices of gasoline and other petroleum products amid the conflict in West Asia, local media reported.

Speaking to reporters on Wednesday, Takaichi said that Japan will release 15 days worth of reserves held by the private sector and then one month worth of oil owned by government without waiting for a decision coordinated by the International Energy Agency (IEA), Japan's leading media outlet Kyodo News reported.

Japan will for the first time release its government oil reserves individually and not in an internationally coordinated way since the stockpiling of oil started in 1978.

Takaichi stated that Japan's reliance on the Middle East for crude oil is "prominently high" compared to other nations and imports are expected to reduce late this month or later, resulting in measures needed to stop a disruption to the supply of gasoline and other petroleum products.

Citing the possibility that the average price of domestic retail gasoline could get higher than 200 Yen per litre, Takaichi said that she wants to keep the price at around 170 Yen by using a government fund.

Takaichi said, "We will flexibly review the support measures to ensure continuous relief for the public even if the (Middle Eastern) situation is prolonged."

Japan imports over 90 per cent of its oil from West Asia, making it vulnerable to the closure of the Strait of Hormuz, which has halted the transportation of oil and gas from suppliers in the Persian Gulf following the US and Israel strikes on Iran in February.

The Strait of Hormuz is a narrow passage connecting the Gulf to the Arabian Sea and is one of the world's most important oil transit chokepoints. A large share of crude exports from Gulf producers passes through it, making any threat to the route a major concern for global energy markets.

As of the end of December, Japan possessed 470 million barrels of oil reserves equivalent to 254 days of domestic consumption, of which, 146 days worth were government-held, 101 days owned by the private sector while the remainder is jointly stored with nations that produce oil, Kyodo News reported.

The ongoing conflict began after the joint US-Israel strikes on Iran on February 28, which led to Iran launching drone and missile attacks targetting US assets, regional capitals and allied forces in West Asia.

- IANS

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Reader Comments

P
Priya S
Over 90% reliance on one region is incredibly risky. Japan's situation is a lesson for all import-dependent nations, including India. We must accelerate our transition to renewables and explore more domestic sources. Solar and wind are the future! 🌞
R
Rohit P
Releasing reserves is a short-term fix. The real issue is the instability in West Asia affecting global supply chains. When will major powers understand that constant conflict hurts ordinary people everywhere with higher prices? Hope our government is watching this closely.
S
Sarah B
Interesting to see Japan acting unilaterally instead of waiting for IEA coordination. It signals how serious they perceive the threat to the Strait of Hormuz. A closure there would send shockwaves through the Indian economy too. Scary thought.
V
Vikram M
They have 254 days of reserves! That's impressive planning. While the move might stabilize prices temporarily, I respectfully think it's a bit reactive. The focus should be on diplomatic efforts to de-escalate the region's conflicts, which are the root cause.
K
Kavya N
Directly linking the release to keeping petrol at 170 Yen shows the government is feeling public pressure. We know that feeling in India all too well! 😅 Hope this brings some relief to Japanese citizens. Global events have local consequences.

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