Japan’s Prime Minister Sanae Takaichi on Wednesday asked the head of the International Energy Agency (IEA) to be ready for an additional release of oil stocks from reserves if it is necessary.
The IEA two weeks ago launched the biggest coordinated emergency stocks release, of over 400 million barrels, since it was created in the 1970s.
As part of this release, the U.S. has moved to release 172.2 million barrels from the U.S. Strategic Petroleum Reserve (SPR), and Japan early this week began preparations to start releasing crude oil from stockpiles held jointly by the country and oil producers as well as national stocks. Japan will be releasing a total of 80 million barrels of oil stocks, including 54 million barrels of crude and 26 million barrels of oil products as part of the IEA’s 400-million-barrel release.
Japan is particularly vulnerable to the worst supply disruption in the history of oil markets as 95% of its oil imports typically come from the Middle East, and via the Strait of Hormuz.
At a meeting on Wednesday with the IEA’s Executive Director Fatih Birol, Japan’s PM Takaichi asked the agency to make preparations for an additional release if needed.
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“In preparation for the possibility that the situation becomes prolonged, I asked that preparations be made for an additional coordinated release,” Takaichi wrote in a social media post carried by Reuters.
Birol responded to Japan’s statements, “If the situation requires more support from the IEA, we are there.”
“We still have a significant amount of stocks. If necessary, we are ready to move forward — but I very much hope that it will not be necessary,” the agency’s executive director added.
Earlier this week, Birol signaled the IEA could release additional volumes of crude from storage should the need arise.
Birol has described the current oil supply crisis as worse than the Arab oil embargo from the 1970s and the effects of the war in Ukraine put together. He also admitted that “A stock release will help to comfort the markets, but this is not the solution. It will only help to reduce the pain in the economy.”
By Michael Kern for Oilprice.com
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