The Japanese government is considering releasing its national oil reserves alone to deal with energy supply disruptions caused by the US-Israeli war on Iran. This move, if implemented, would be the first time Japan has used government-owned reserves since the system was established in 1978.
Concerns have been heightened after shipping traffic in the Strait of Hormuz was completely paralyzed following increased military attacks in the Middle East region. Japan is a country particularly vulnerable to this crisis as more than 90 percent of its crude oil imports depend entirely on sources from the region.
As of the end of December, Japan had oil reserves that could last for 254 days of domestic consumption. Of this amount, 146 days were directly owned by the government, while the rest were held by the private sector and joint reserves with oil-producing countries.
The main objective of this stock release is to ensure that wholesalers and trading firms have a stable supply for domestic use. However, experts expect the move to have only a limited impact on curbing the surge in prices of gasoline and other petroleum products in the market.
The Japanese government is currently exploring a rapid delivery mechanism to shorten the oil distribution time that usually takes a month. A decision on the exact amount of reserves to be released will be made after a careful assessment of the critical level of global supply disruptions.
