As gasoline prices across Japan started to rise with the war disrupting supplies from the Gulf’s Strait of Hormuz, Tokyo pledged to release a record 80 million barrels of oil, about 45 days of supply for the resource-poor nation.
The government has asked Japan’s refiners to use the released crude, which will reduce the national reserves by 17%, to secure domestic supplies. It is not known how much of the oil will go to a global release of 400 million barrels being coordinated by the International Energy Agency to address the war’s supply shock and price volatility. Japan’s release shows how seriously Tokyo views the disruption, said Yuriy Humber, Chief Executive Officer, of Tokyo-based consultancy Yuri Group.
“The reserves can help stabilise supplies and prices in the short term but they mainly buy time. They can’t fully offset a prolonged disruption in the Strait of Hormuz,” he said. Any potential release from 12 million barrels jointly held in Japan by Saudi Arabia, United Arab Emirates and Kuwait would be in addition to the announced 80 million barrels, the Ministry of Economy, Trade and Industry says. Japan started its national oil reserve system in 1978, several years after the Arab oil embargo. The Group of Seven nation, reliant on the Middle East for around 90% of its oil, now stockpiles 254 days of consumption.
–Reuters–
