Anticipating Soaring Global Oil Prices, Japan Subsidises Fuel

The Japanese government has restarted its fuel subsidy scheme on Thursday to curb rising commodity prices following the escalation of tensions in the Persian Gulf region. The subsidy is set at 30.2 yen (Rp3,124) per litre for regular fuel until next Wednesday to ensure the national average retail price of fuel remains around 170 yen (Rp18,213). The subsidy programme also includes diesel fuel and heavy oil to help ease cost pressures on the business world as well as the agricultural, forestry, and fisheries industries. The value of the fuel subsidy from the Japanese government will be adjusted weekly based on forecasts of the next week’s retail prices that reflect changes in crude oil prices. Regular fuel prices in Japan surged to a high of 190.8 yen (Rp20,462) per litre on Monday (16/3), an impact of the rise in crude oil prices after attacks by the United States and Zionist Israel on Iran. The Japanese government’s decision to set this subsidy follows estimates that fuel prices will continue to rise to 200.2 yen (Rp21,427) per litre next week. Even with the fuel subsidy in place, Japan’s Ministry of Economy has stated that the timing of fuel price reductions may differ between petrol stations, considering there are still pre-subsidy fuel reserves that have not been released. The Japanese government has also not yet determined when the fuel subsidy will end.