Japan Considers Releasing Oil Reserves in Response to Rising Prices
2 Min Read
Oil prices begin falling with major economies considering releasing their strategic petroleum reserves following the last surge.
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As of late September Japan had enough oil reserves for 242 days of usage
According to sources quoted by Japan's Kyodo news agency, the Japanese government is considering releasing crude oil stockpiles to prevent the rise in oil prices.
Japan had previously employed this approach solely in the event of natural disasters or disruptions in overseas supply due to an unpredictable political scenario. As a result, for the first time, the step is being viewed as a tool for price stabilization.
The country's oil is stored in both national and private oil reserves. According to the media, Japan had enough oil reserves for 242 days of usage as of late September.
Due to the rise in global oil prices, Japan's fuel prices have reached new highs, and the government has decided to pay oil companies an extra five yen ($0,044) per one liter of fuel produced starting in December 2021 if gasoline prices exceed 170 yen per liter.
A fall in oil prices
Oil prices had fallen 3% to below $80 a barrel on Friday, as rising COVID-19 cases in Europe slowed the economic recovery, while investors considered the possibility of big economies releasing oil stockpiles to lower prices, according to Reuters.
Brent futures slid $2.35, or 2.9%, to $78.89 a barrel in January.
On its final day as the front-month, December West Texas Intermediate (WTI) crude sank $2.91, or 3.6%, to $76.10. WTI for January, which will be the US front-month soon, was down $2.65, or 3.4 %, to $75.78.
Brent has risen over 60% this year as economies recover from the epidemic and the Organization of Petroleum Exporting Countries (OPEC) and its partners, known as OPEC+, progressively increase supply.
Following a request from the US, originally reported by Reuters, for a concerted attempt to temper prices, governments from several of the world's largest countries were looking into releasing oil from strategic petroleum reserves (SPR).
Oil prices have fallen nearly $4 a barrel in recent weeks due to speculation about a US SPR release, and extra supplies of up to 100 million barrels have already been priced in, according to Goldman Sachs oil experts.
