On Wednesday, Fumio Kishida, Japan’s prime minister, said that in response to a US request, his government would release some oil stocks in a way that does not violate a Japanese rule that only authorises stock releases if there is a risk of supply disruption.
The possibility of a coordinated release, combined with additional coronavirus-related lockdowns across Europe, has stifled crude oil’s surge. As a result, Brent crude was recently selling at $79.30 a barrel, down nearly $7 from its October high.
Kishida did not elaborate on how the stocks will be distributed. He said Industry Minister Koichi Hagiuda would reveal more specifics later on Wednesday, such as the amount to be sold. Japan would continue to lobby oil-producing countries to prevent price swings.
OPEC+ has been adding roughly 400,000 barrels per day to the market on a monthly basis, but they have rejected Biden’s pleas for faster increases, insisting that the demand recovery is weak. As a result, according to the Nikkei newspaper, Japan will host auctions for around 4.2 million barrels of oil out of a total national stockpile of about 490 million barrels.
According to the Nikkei, the crude oil auctions, which would cover one or two days of Japan’s national consumption, will take place by the end of the year, which did not name a source.
President Joe Biden’s administration announced Kishida’s appointment on Tuesday. According to the declaration, it will release millions of barrels of oil from strategic reserves in collaboration with India, South Korea, China, Japan, and the United Kingdom in order to try to contain soaring petroleum prices after major global producers consistently disregarded pleas for increased supply.
In reaction to rising crude oil prices, Japan has never published crude oil stocks before. However, decisions to tap reserves in the past have been taken to resolve supply difficulties in the aftermath of natural disasters and international political unrest. The US will release 50 million barrels under the planned plan, which is enough to meet US demand for two and a half days.