Japan will cut its mandatory minimum for oil reserves held by refiners and other private-sector oil firms in a concerted action by the International Energy Agency, a senior government official said Monday.
Last week, the IEA announced the daily discharge of 2 million barrels in response to the supply interruption caused by Hurricane Katrina in the United States.
Vice Economy, Trade and Industry Minister Hideji Sugiyama told a news conference that releasing stocks of private-sector-held petroleum products, instead of crude oil reserves, in Japan would have "an immediate effect" on the tight oil supply situation in the global market.
The government will decide the particulars for the oil release "as soon as possible," Sugiyama said. "I believe the IEA's collective action would have some favorable effects on the oil supply and demand situation in the world as well as in Japan."
It is the first time the IEA has tapped its 26 members' reserves since 1991, when it tried to curb soaring oil prices during the Gulf War. The latest action is expected to last 30 days and Japan is required to discharge about 12 percent of the 2 million barrel release.
Japan's private-sector oil firms are currently obliged to keep minimum oil stockpiles able to meet demand for 70 days. They now have enough for 79 days in total.
The government plans to lower the minimum stockpile levels to increase petroleum product supplies, Sugiyama said.
The U.S. has lost 1.5 million barrels per day of oil production and 2 million barrels per day of refining capacity.