Japan has announced it will begin releasing oil reserves as early as next Monday to address a potential sharp rise in gasoline and other petroleum product prices, which have surged amid the ongoing Middle East conflict and disruptions in oil supply routes, particularly the Strait of Hormuz [1][2][3]. Prime Minister Sanae Takaichi stated that Japan will release 15 days' worth of reserves held by the private sector, followed by one month's worth of government-held oil, marking the first time Japan has individually released government oil reserves since 1978 [1]. This action is being taken without waiting for a coordinated decision from the International Energy Agency (IEA) [1].
The IEA, representing many of the world's wealthiest countries, has also pledged to release a record 400 million barrels of emergency oil reserves to counteract the effects of the Iran war on energy markets and the halt of cargo shipping through the Strait of Hormuz [2]. This release is more than double the 182.7 million barrels released in 2022 in response to Russia’s invasion of Ukraine [2]. According to the IEA, current export volumes of crude and refined products are less than 10% of prewar levels, and global energy supply has been reduced by around 20% [2]. The G7 nations are contributing 70% of the total pledged, with France alone providing 14.5 million barrels [2].
In Japan, the average retail gasoline price rose to 161.80 yen per liter as of Monday, up 3.30 yen from March 2, marking the fourth consecutive weekly increase [1][3]. The Oil Information Center estimates that the price could rise by a further 20 yen next week, potentially surpassing 180 yen per liter, as tensions in the Middle East persist [3]. Prime Minister Takaichi aims to keep gasoline prices around 170 yen per liter by utilizing a government fund, noting the risk that prices could otherwise exceed 200 yen per liter [1]. Diesel and kerosene prices have also increased, with diesel up 3.2 yen to 149.8 yen per liter and kerosene up 47 yen to 2,267 yen per 18 liters [3].
Japan's dependency on the Middle East for crude oil is described as "prominently high," with more than 90% of its oil imported from the region, making it highly vulnerable to disruptions in the Strait of Hormuz [1]. As of the end of December, Japan held 470 million barrels of oil reserves, equivalent to 254 days of domestic consumption [1]. Takaichi emphasized that support measures will be flexibly reviewed to ensure continuous relief for the public if the Middle Eastern situation is prolonged [1].
The IEA's announcement followed a meeting of G7 energy ministers in Paris and was praised by French President Emmanuel Macron as a critical step to increase global production and stabilize markets [2]. The situation remains fluid, with ongoing risks to energy supply and inflationary pressures in Japan and globally [1][2][3].
CONCLUSION
Japan and the IEA are taking unprecedented steps to release oil reserves in response to surging prices and supply disruptions caused by the Middle East conflict. Gasoline prices in Japan are rising rapidly, with further increases expected, prompting government intervention to stabilize the market. The coordinated international response underscores the high market impact and ongoing risks to global energy security.