The government will release its oil stockpiles, primarily by auction, if a U.S.-led war on Iraq causes market disruptions and prompts the international community to act jointly to prevent a price spike, a ministry official said Thursday.
"Basically, we will first call for tenders using the market mechanism," said Seiji Murata, vice minister of economy, trade and industry, referring to a recent request by an oil industry leader that reserves be released by barter.
Murata said Japan plans to join other industrial nations at the International Energy Agency to coordinate the release of oil reserves in response to a war in Iraq or other emergency situations.
He dismissed the possibility the countries would move even before the launch of attacks on Iraq, although fears of war are sending crude prices soaring.
"It would be difficult unless there is a factor causing fairly large fluctuations and the market moves drastically," he said.
The comments were made in response to a reported suggestion by Keiichiro Okabe, president of the Petroleum Association of Japan, that the government release its oil stockpiles by barter in a bid to avoid further oil price increases.
Okabe told a news conference Wednesday oil stockpiles in the private sector should be used before government stockpiles if reserves need to be tapped in the event of a U.S.-led campaign in Iraq.