The International Energy Agency (IEA) on March 12 announced that 32 countries will jointly release 400 million barrels of oil reserves to the market to respond to the risk of supply disruptions in the context of the Middle East conflict shaking the energy market.
Japan is expected to contribute about 80 million barrels of oil to joint intervention efforts, according to the country's Ministry of Economy, Trade and Industry. The government said the detailed plan is still being finalized, but the amount of oil expected to be released will be considered as Tokyo's contribution to the global coordination action.
Prime Minister Sanae Takaichi previously announced that Japan would release oil equivalent to 45 days of domestic demand, the highest level ever. This figure includes private reserves equivalent to 15 days of consumption. According to Ms. Takaichi, the oil will be transferred to domestic refineries as quickly as possible.
Japan currently has oil reserves equivalent to about 254 days of domestic demand. Of these, 146 days are in the national reserves, 101 days are in the compulsory reserves of the private sector and 7 days are in the cooperation reserve program with oil producing countries.
According to the IEA, member countries currently hold a total of about 1.8 billion barrels of emergency oil reserves. Of which 1.2 billion barrels belong to national reserves and 600 million barrels belong to compulsory reserves of the private sector.
The US is also participating in the plan when it is expected to release 172 million barrels of oil from the Strategic Oil Reserve in about 120 days. South Korea announced it will supply 22.46 million barrels from its reserves.
IEA Director General Fatih Birol said that the oil market is facing an unprecedented challenge in scale, so the emergency response of member countries must also be at an unprecedented level. According to him, the oil market is global, so handling major disruptions also requires international coordination.
The release of 400 million barrels of oil is equivalent to about 4 days of global demand, in the context of the world consuming more than 100 million barrels per day.
Oil prices fluctuated sharply after US and Israeli forces attacked Iran, leading to retaliatory strikes in the region and disrupting transportation through the Strait of Hormuz. More than 70% of Japan's oil imports pass through this route.
The market is still skeptical about the effectiveness of the intervention. Brent oil price surpassed $100 on March 12 in Asia, while Tokyo's Nikkei 225 index fell and the yen approached 160 yen per dollar.
Japanese Chief Cabinet Secretary Minoru Kihara said Tokyo considers the IEA's decision a step contributing to stabilizing the international market and hopes it will support the stability of the global energy market.
