Japan started the largest-ever release of oil from its strategic reserves on Monday, an 80 million-barrel effort as the Strait of Hormuz stays effectively closed amid the U.S.-Israeli war with Iran and crude oil prices continue to soar.
The release — 15 days’ worth of domestic demand from mandatory private reserves and one month from national reserves — was the seventh ever conducted in the nation.
The private reserve release is being carried out by lowering the required stockpile amount, from 70 days to 55 days, initially for one month. The government has also decided to transfer one month’s worth of national petroleum reserves for the time being, the Economy, Trade and Industry Ministry announced Monday.
“We will closely monitor the situation and continue to leave no possibility off the table and work in coordination with the international community to ensure a stable energy supply for Japan,” Chief Cabinet Secretary Minoru Kihara said the same day.
Japan holds stockpiled oil equivalent to about 254 days of domestic demand — including 146 days worth of oil in national reserves, 101 days in mandatory private stockpiles and seven days under a reserve program with oil-producing countries. Monday’s release is roughly 17.7% of the total amount.
The planned release was announced by Prime Minister Sanae Takaichi last Wednesday, hours before the International Energy Agency (IEA) decided to release an unprecedented 400 million barrels collectively by its 32 member countries, including Japan.
She also announced that the government would reinstate subsidies to effectively cap gasoline prices at around ¥170 per liter. Similar measures will also be taken to contain diesel fuel, heavy oil and kerosene prices.
Japan conducted past releases primarily using stockpiles held in private reserves, except after Russia’s invasion of Ukraine in 2022, when it tapped its national reserves for the first time after the IEA requested additional proportions to be undertaken by its member nations.
Crude oil prices soared over the weekend and again on Monday as U.S. President Donald Trump’s call on other countries to help secure the Strait of Hormuz was met with lukewarm responses. Brent crude was standing at about $104 per barrel as of Monday afternoon.
As crude oil tankers are effectively unable to pass through the strait, which sees most of Japan-bound oil pass through, crude imports to Japan are expected to decline significantly from the latter half of this month.
The Nikkei 225 stock index closed down 0.13% on Monday. The dollar-yen rate has also been lingering close to ¥160 for the past few days, a level seen by traders as a red line that could trigger government intervention.
Finance Minister Satsuki Katayama ramped up verbal intervention on Monday.
“We are watching…