TOKYO: Japan plans to start releasing oil from its stockpiles on Monday (March 16) to soften the shock from the US-Israeli strikes on Iran, a stark reminder of the oil crisis half a century ago that prompted Tokyo to create reserves.
As gasoline prices across Japan started to rise with the conflict 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 per cent, 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 conflict's supply shock and price volatility.
Reserves can stabilise supply but 'mainly buy time'
Japan's release shows how seriously Tokyo views the disruption, said Yuriy Humber, CEO 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 per cent of its oil, now stockpiles 254 days of consumption.
It will start releasing 15 days' worth of private-sector oil on Monday and a month's worth from the state reserves from late this month, according to METI.
As private companies prepare to tap Japan's stockpiles, METI Minister Ryosei Akazawa said they are also looking for supplies from the US, Central Asia, South America and Gulf nations that can bypass the Strait of Hormuz.
Japan gets around four per cent, of its oil from the US after largely stopping purchases from Russia following Moscow's 2022 Ukraine invasion - when Tokyo last tapped its reserves.
"When you look at the conflict in the Middle East... you're reminded of all that crude oil that has gone from Alaska to Japan was never targeted with a successful terrorist attack," US Environmental Protection Agency Administrator Lee Zeldin told Reuters.
"This conflict... is a reminder that along the Indo-Pacific, a lot of other nations can look to the United States, where we have the resources." - Reuters
