Japan and the US will officially announce as early as this week the release of oil reserved for emergencies, according to an official related to the Japanese government.
Private-sector reserves have been released in the past, but this would be the first time for the government’s stores to be released.
The aim is to prevent the prices of petroleum products, including petrol, from rising further by temporarily increasing the supply of oil to the market. However, the actual outcome is hard to predict.
The administration of US President Joe Biden had been quietly urging other countries, including Japan and South Korea, to make concerted efforts with Washington to release emergency stores of petroleum.
The Japanese government was initially cautious, as it has never released oil stored for emergencies in response to rising petroleum prices, but it ultimately changed tack.
There are at least two kinds of oil stockpiled for emergencies in Japan – oil owned and stockpiled by the state, and that stored by the private sector as required by law.
As of the end of September, the state’s reserves were equivalent to the amount of oil consumed in the nation over 145 days. The private sector reserves were equivalent to 90 days’ consumption.
The Petroleum Reserve Law stipulates that the state should stockpile at least 90 days’ worth of daily imports of crude oil, while the private sector must have at least 70 days’ worth in reserve.
Both the government and the private sector currently have more than the required minimum. It has been suggested that the amount in excess of the target should be sold and supplied to the market.
Private sector stores were released during the Gulf War in 1991 and also when the situation in Libya deteriorated in 2011.
The Petroleum Reserve Law was revised in 2012, in response to the severe shortage of petrol that occurred in the wake of the Great East Japan Earthquake. The revision allowed the release of stockpiled oil at times of disaster, in addition to when there is a shortage of supply from overseas.
The average retail price of regular petrol in Japan stood at 168.9 yen ($1.50) per litre as of November 15, the highest level in seven years.
Even if reserves are released, however, the amount is expected to be limited, making it uncertain how much this measure would hold down prices at the pump.
THE YOMIURI SHIMBUN (JAPAN)/ASIA NEWS NETWORK