Japan opens oil reserves to mitigate Strait of Hormuz blockade effects

Tokyo — Japan’s Ministry of Economy has instructed domestic oil companies to release portions of their strategic oil reserves, according to official documents from the Japanese government gazette.

“Based on the Oil Reserve Maintenance Law of 1975, a decision has been made to reduce baseline oil reserves,” according to a directive from the Ministry of Economy issued on Monday.

The instruction applies until 15 April to all refineries, marketers and oil importers. The volume of oil released to the market will be sufficient to meet Japan’s oil supply needs for 15 days.

The decision to reduce oil reserves from both government and commercial sources was made following a surge in commodity prices resulting from tensions in the Middle East.

The Japanese government is reported to be releasing 80 million barrels of oil from its strategic stockpile, equivalent to 45 days of Japan’s oil demand.

This figure will be achieved by releasing 15 days of reserves from commercial sources and 30 days of reserves from government storage facilities.

Following the release of oil reserves, Japan’s remaining strategic oil stockpile will be sufficient for 254 days, or approximately 470 million barrels. This includes 146 days of reserves from government storage and 101 days from private oil storage facilities.

Approximately 94 per cent of Japan’s oil supply originates from the Middle East, with nearly all of it requiring transit through the Strait of Hormuz, which is currently closed due to ongoing conflict.

The disruption at the Strait of Hormuz occurred following a combined military operation by the United States and Israel on 28 February against Iran, including Tehran, resulting in infrastructure damage and loss of life.

Iran subsequently launched retaliatory attacks against Israeli territory and United States military bases throughout the Middle East.