TOKYO - Japan will start releasing oil from state reserves on Thursday, Prime Minister Sanae Takaichi said Tuesday, as concerns over supply mount and oil prices soar amid the ongoing U.S.-Israeli war with Iran.
The measure, announced during the first meeting of relevant Cabinet members to discuss ways to cushion the impact of the tensions in the Middle East on the Japanese economy, comes after Japan started releasing oil from private-sector stockpiles last week.
The government plans to sell a total of about 8.5 million kiloliters of oil from its reserves into the market from 11 storage bases across the country, according to the Ministry of Economy, Trade and Industry.
Takaichi also said that joint oil reserves of oil-producing Middle Eastern nations stored in Japan will begin to be tapped by the end of this month.
"The peace and stability of the Middle East are extremely important for Japan and the international community," she said, adding that Tokyo will continue to "make all necessary diplomatic efforts in close coordination with related countries" and try to "minimize the impact on economic activities."
Takaichi said that she and U.S. President Donald Trump affirmed the importance of ensuring stable energy supplies by securing safe navigation in the Strait of Hormuz, a key waterway for global oil transportation, during their summit in Washington last Thursday.
Trump on Monday expressed eagerness to resolve the conflict through dialogue, as he said there are "major points of agreement" in negotiations between the United States and Iran. Tehran, however, has denied participating in any talks.
The U.S. president also told reporters in Florida that his son-in-law Jared Kushner and special envoy Steve Witkoff are engaging in the negotiations.
Japan relies on the Middle East for over 90 percent of its crude oil imports, most of which travel through the Strait of Hormuz. The strait has been effectively closed by Iran in the wake of the start of the conflict with U.S. and Israeli forces in late February, triggering a surge in crude oil prices.
Ahead of a joint release led by the International Energy Agency, Takaichi said on March 11 that Japan would unilaterally begin freeing up 15 days' worth of reserves held by the private sector from March 16, with a month's worth of state-held oil to follow.
At the ministerial meeting, examining possible ramifications on the economy of a drop in domestic output of ethylene, widely used in plastic products, and diversifying crude oil suppliers will be among other issues to be discussed.
The Cabinet also decided to use 800.7 billion yen ($5 billion) in reserves from the current fiscal year's budget, including 794.8 billion yen for a fund to finance subsidies to curb the rise in gasoline prices.
With the regular gasoline price having hit an all-time high of 190.80 yen per liter last week, the government aims to lower the national average retail price to around 170 yen.
Later on Tuesday, Takaichi held separate phone talks with Malaysian Prime Minister Anwar Ibrahim and Marshall Islands President Hilda Heine and agreed with them to collaborate toward an early de-escalation of the Middle East situation, according to the Foreign Ministry.
