Prime Minister Sana Takaichi said on Wednesday that Japan will begin extracting crude oil from its strategic reserves next Monday to avoid a possible rise in gasoline and oil prices caused by Middle East conflicts and disruptions to oil shipments to the Persian Gulf.
The intervention will be the first time the country has used its national oil reserves without waiting for a coordinated response from the International Energy Agency (IEA) since stockpiling began in 1978.
This release covers 15 days of stocks held by private sector entities, followed by a month’s supply of government stocks.
“We will consider support measures flexibly to ensure continued relief for the people, even if the situation is prolonged,” Takaichi told reporters in Tokyo.
Japan’s decision comes amid heightened concern over its energy flows through the Strait of Hormuz, which has been effectively closed to commercial traffic since the US and Israeli military strikes on Iran late last month.
With more than 90% of Japan’s crude oil imports coming from Gulf producers, Takaichi’s dependence on other industrialized economies is described as “significantly high”.
The Prime Minister warned that supplies are expected to drop significantly by the end of March, leading to severe shortages of gasoline and other refined products.
Retail gasoline prices have already started to rise. Industry ministry data showed the national average was close to 162 yen ($1.02) per liter as of Monday, down from an average low of about 155 yen in January.
Takaichi cited forecasts that prices could breach 200 yen ($1.26) per liter and pledged to set aside government funds to cover costs of around 170 yen, a buffer of about 15% below the expected peak.
At the end of December, Japan had 470 million barrels of oil in stock, enough to cover 254 days of domestic consumption.
