Japan is considering releasing oil from its reserves along with the United States and other countries to help curb rising crude oil prices, Prime Minister Fumio Kishida said Saturday.
“We are considering what we can do,” Kishida told reporters in Matsuyama, Ehime Prefecture, when asked about the possibility, as surging prices of gasoline and other fuel products are squeezing households and companies that have already been hit hard by the coronavirus pandemic.
There are, however, voices in the government cautioning against releasing oil reserves at times other than when there is a supply shortage, officials said.
Japan has never previously released crude oil stockpiles in response to rising prices. Past decisions to tap reserves were made to address supply concerns following natural disasters and overseas political turmoil.
Kishida’s Cabinet approved an economic stimulus package Friday with a record ¥55.7 trillion ($490 billion) in fiscal spending, which includes a subsidy program for oil wholesalers and importers to contain gasoline and kerosene prices once they hit a certain threshold to alleviate the financial burden.
Responding to a question during a press briefing Friday about the possibility of a coordinated emergency stockpiles release with Japan and other countries, White House Press Secretary Jen Psaki said Washington has been in discussions with leaders from various countries to ensure there is adequate supply of crude oil, but didn’t elaborate further.
Japan, which relies on oil-producing countries in the Middle East for around 90% of its consumption, started keeping crude oil reserves in the 1970s.
Japan has three different types of oil stocks — state-owned, reserves held by companies and those stored with oil-producing countries.
As a member of the International Energy Agency, Japan is obliged to maintain oil reserves equal to 90 days of net imports of the previous year, while the quantity of private emergency stocks should be more than 70 days of its oil consumption in the previous year.
As of the end of September, Japan had reserves for 242 days of domestic consumption, including joint stockpiles with oil-producing countries.
Under current regulations, state oil reserves are not intended for use to address price surges. As there are more than enough reserves, however, a plan under consideration calls for releasing a surplus after lowering the reserve target, sources said.
It would be Japan’s first release of state oil reserves since the country complied with a request from the International Energy Agency in June 2011 due to the deteriorated situation in Libya.
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