The decision comes as gasoline prices rise across Japan, as a result of disruptions to oil supplies from the Gulf region, particularly through the Strait of Hormuz, one of the world's most important energy chokepoints.
Price fluctuations
The Japanese government has pledged to release 80 million barrels of oil, equivalent to about 45 days of consumption in the country, which relies heavily on imports to meet its energy needs.
The government has asked Japanese refiners to use the released oil to secure domestic supplies, which will reduce the national reserve by about 17%. It is not yet clear how much Japan might contribute to a broader plan to release about 400 million barrels of oil globally, which is being coordinated through the International Energy Agency with the aim of reducing price volatility and compensating for supply shortages.
Temporary measure
Experts believe this move may help stabilize the market temporarily, but it will not be a long-term solution if the turmoil continues.
“Oil reserves can help stabilize supplies and prices in the short term, but essentially they give markets extra time to adapt to the crisis,” said Yuri Hamper, chief executive of a Tokyo-based consulting firm.
He pointed out that these reserves cannot compensate for any long-term disruption to shipping traffic through the Strait of Hormuz.
Japan intends to begin releasing quantities from its oil reserves starting tomorrow, in a move aimed at alleviating the repercussions of the energy supply disruptions resulting from the war between the United States, Israel, and Iran, a move that recalls the oil crisis the world experienced nearly half a century ago, which prompted Tokyo at that time to establish a strategic oil reserve system.
The decision comes as gasoline prices rise across Japan, due to the impact on oil supplies coming from the Gulf region, particularly through the Strait of Hormuz, one of the world's most important energy corridors.
Price Fluctuations
The Japanese government has pledged to release 80 million barrels of oil, which is equivalent to about 45 days of consumption in a country that relies heavily on imports to meet its energy needs.
The government has asked Japanese refining companies to use the oil that will be released to secure local supplies, which will lead to a reduction in the national reserve by about 17%. It is still clear how much Japan may contribute to a broader plan to release about 400 million barrels of oil globally, coordinated through the International Energy Agency with the aim of mitigating price fluctuations and compensating for supply shortages.
Temporary Measure
Experts believe that this step may help stabilize the market temporarily, but it will not be a long-term solution if disruptions continue.
The CEO of a consulting firm in Tokyo, Yuri Hamber, stated: “The oil reserves can contribute to stabilizing supplies and prices in the short term, but they essentially give the markets extra time to adjust to the crisis.”
He noted that these reserves cannot compensate for any long-term disruption in navigation through the Strait of Hormuz.
