As many countries around the world are already struggling with the economic disruptions and the spike in oil prices as a result of the ongoing chaos in the Middle East, Japan has decided to release its own oil reserves and it could happen as early as Monday (March 16), according to a news report by Kyodo News.
To put things in perspective, posted below is an excerpt from the news report of Kyodo News Some parts in boldface…
Japan will begin drawing down its oil reserves as early as next Monday to deal with a possible sharp rise in gasoline and other petroleum product prices amid the Middle East conflict, Prime Minister Sanae Takaichi said.
Takaichi told reporters on Wednesday that Japan will release 15 days’ worth of reserves held by the private sector and then one month’s worth of government-held oil without waiting for a decision coordinated by the International Energy Agency.
It will be the first time Japan has released its government oil reserves individually, not in an internationally coordinated way, since the stockpiling of oil began in 1978.
Japan’s dependency on the Middle East for crude oil is “prominently high” compared with other countries and imports are expected to “significantly drop late this month or later,” necessitating measures to prevent a disruption to the supply of gasoline and other petroleum items, Takaichi said.
Citing the possibility that the average price of domestic retail gasoline could surpass 200 yen ($1.26) per liter, Takaichi also said she aims to keep the price at around 170 yen by utilizing a government fund.
The price of gasoline hit as low as 154.70 yen in mid-January but rose to 161.80 yen per liter as of Monday, according to industry ministry data.
“We will flexibly review the support measures to ensure continuous relief for the public even if the (Middle Eastern) situation is prolonged,” Takaichi said.
Japan imports more than 90 percent of its oil from the Middle East, making it highly vulnerable to the effective closure of the Strait of Hormuz, which has prevented the transportation of oil and gas from suppliers in the Persian Gulf, after the U.S. and Israel attacked Iran late last month.
As of the end of December, Japan had 470 million barrels of oil reserves equivalent to 254 days of domestic consumption, of which 146 days’ worth were government-owned, 101 days held by the private sector, and the remainder jointly stored with oil-producing countries.
Let me end this piece by asking you readers: What is your reaction to this development? Do you think Japan made the right decision to release its oil reserves good for fifteen days? Do you think Japan will be able to find new and alternative sources of oil so that it can cut its reliance on Middle East oil?
You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.
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