Japan considers releasing national oil reserves amid Iran conflict

TOKYO — The Japanese government is considering releasing its national oil reserves to prepare for possible prolonged supply disruptions amid the U.S.-Israeli war with Iran, a source familiar with the matter said Friday.

Japan may release the stockpile on its own rather than as part of a coordinated international effort, according to the source. If realized, it would be the first such move by the resource-scarce nation since the establishment of the national oil stockpiling system in 1978.

If other countries seek to join the move, the Japanese government plans to hold talks on the issue.

Releases of oil reserves are commonly carried out as a coordinated effort under the International Energy Agency. Such action was taken after Russia's full-scale invasion of Ukraine began in 2022.

Shipping traffic through the Strait of Hormuz, a vital oil route, has been paralyzed as fighting in the region escalates following U.S. and Israeli strikes on Iran late last month, raising supply concerns in Japan, which depends on the Middle East for more than 90 percent of its crude oil imports.

The release of government-held oil is intended to offset the decline in oil held by wholesalers and trading firms, but it is likely to have only a limited impact on curbing price rises in gasoline and other oil products.

The Japanese government will carefully decide whether to release the national oil reserves and how much, the source said.

As of the end of December, Japan had oil reserves totaling 254 days of domestic consumption, of which 146 days' worth were government-owned, 101 days held by the private sector with the remainder jointly stored with oil-producing countries.

The source said the government may also seek to use the private sector oil stockpiles depending on the situation.

So far, the most likely scenario is the freed-up reserves will be sold to oil wholesalers in Japan to ensure a stable supply. The government will consider a fast-track measure for delivery, as usual release takes about a month including auctions.

Japan's past decisions to tap oil reserves were to address supply concerns following natural disasters and overseas political turmoil, such as the Gulf War in the early 1990s and the massive earthquake and tsunami in northeastern Japan in March 2011.

The release in the wake of the 2011 quake and tsunami disaster, which also triggered a nuclear accident, involved private sector oil stockpiles and was not an internationally coordinated effort.

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