Japan to Begin Releasing Privately Held Oil Reserves on the 16th Amid Crude Supply Concerns

Financial News correspondent in Tokyo Seo Hye-jin reported that the Japanese government began releasing oil reserves held by private companies on the 16th. With the number of tankers expected to depart the Middle East for Japan falling sharply this week, the government plans to preemptively inject additional supply into the market to ensure stable deliveries of petroleum products.
According to Nihon Keizai Shimbun (The Nikkei), The Asahi Shimbun and other outlets, the government on the same day published in the official gazette a notice based on the Oil Stockpiling Act that lowers the mandatory stockpiling level for private companies from 70 days of consumption to 55 days. As a result, refiners and other private firms will be able to release into the market the crude oil and petroleum products they hold in excess of the new requirement.
The government will first release the equivalent of 15 days of private-sector reserves, and then plans to additionally draw down about one month’s worth from the national strategic reserves.
The total release is expected to reach about 80 million barrels, which would be the largest in Japan’s history. This represents roughly 20% of the country’s overall oil stockpiles.
Japan has not released oil reserves on this scale since 2022, when Russia invaded Ukraine, roughly four years ago. Since the current stockpiling system was introduced in the 1970s, this will be the seventh such release.
As of the end of last year, Japan’s oil reserves totaled about 470 million barrels, equivalent to 254 days of domestic consumption. By category, this consists of 146 days’ worth in national reserves, 101 days in private reserves, and 7 days in joint reserves held with oil-producing countries in Japan.
The Japanese government will also implement price-stabilization measures. Starting on the 19th, it plans to provide subsidies to refiners so that gasoline prices at service stations are kept around 170 yen per liter.
Crude prices have been surging after Iran effectively shut down the Strait of Hormuz. According to Bloomberg News, May-delivery futures for Brent Crude Oil, the global benchmark, were trading at $104.70 per barrel as of 8:45 a.m. Korea time on the 16th, up 1.5% from the previous settlement on the 13th.
Japan is a major energy importer that relies on the Middle East for more than 90% of its crude oil imports. Analysts have long warned that if geopolitical risks materialize, the country’s energy supply and demand could be severely disrupted.

sjmary@fnnews.com Seo Hye-jin Reporter