Japan is working on the release of oil reserves at the request of US sources

A branch of Cosmo Energy Holdings’ Cosmo Oil gas station was seen in Tokyo, Japan, December 17, 2015. Photo taken December 17, 2015. REUTERS / Yuya Shino / File Photo

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TOKYO, Nov. 22 (Reuters) – Japanese officials are working on ways to circumvent restrictions on freeing up crude oil reserves in line with other major economies to curb prices, four government sources told Reuters.

While Prime Minister Fumio Kishida signaled his readiness over the weekend following a request from Washington, the world’s fourth largest oil buyer is limited in how it can trade its reserves – which consist of both private and public shares – which can usually only be used in times of scarcity.

One of the sources said that the government was looking to release the part of the state shares outside the minimum amount required as a legal solution.

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Officials are also looking at private shares that are part of the national reserve, which some advisers claim can be released without restrictions, another source said.

“We have no choice but to invent something,” a third source told Reuters. All sources refused to be identified because the plan has not been made public.

Cabinet Secretary Hirokazu Matsuno said on Monday that nothing had been decided, while Kishida said on Saturday that the government was considering what it could do legally. read more

“We had to change our law and it would take time. But some claim that private warehouses can be released,” said the other source.

“We need to expand the definition so that they can be released,” the official said, adding that no tender is imminent.

Traders said they had not received any notices of a tender.

Japanese private companies, including refineries, have about 175 million barrels of crude oil and oil products as part of the Strategic Petroleum Reserve (SPR), enough for about 90 days of consumption, according to the state agency Jogmec, which manages SPR and manages emissions after the policy is decided .

The oil companies’ reserves have been utilized during the Gulf War in 1991 and after the earthquake and tsunami disasters in 2011. The state’s share in SPR has never been used.

Brent oil fell slightly on Monday after prices fell on Friday, a decline that was largely attributed to impending shutdowns in Europe instead of plans to release oil.

The Biden administration sent the unusual request to other major economies to consider releasing oil from its strategic reserves after members of the Organization of the Petroleum Exporting Countries and its allies repeatedly rejected their requests to accelerate their production growth.

The newspaper Yomiuri quotes government sources as saying that Japan and the United States will coordinate an announcement on the release of oil reserves as early as this week.

High prices are beginning to lead to unwanted inflation and undermine recovery from the COVID-19 pandemic.

Japan’s oil reserve had 145 days of daily petroleum consumption at the end of September, according to official data, well above the minimum of 90 days required by law.

Private sector reserves total 90 days, and also exceed the minimum requirement of 70 days.

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Reporting by Yoshifumi Takemoto, Ritsuko Shimizu and Aaron Sheldrick; Writing and additional reporting by Kantaro Komiya; Edited by Chang-Ran Kim and Jacqueline Wong

Our standards: Thomson Reuters Trust Principles.

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