Japan Prime Minister Kishida confirms release of oil reserves in concert with U.S.

Prime Minister Fumio Kishida said on Wednesday that the government would release some of its oil reserves in concert with the United States in a way that does not breach the law.

Industry minister Koichi Hagiuda will announce the specifics such as the amount, Kishida told reporters, adding that Japan would continue to lobby oil-producing countries to combat drastic price moves.

The amount of oil to be initially released is expected to be equivalent to several days of consumption, according to a government official. In Japan, past decisions to tap reserves were made to address supply concerns following natural disasters and overseas political turmoil.

So far, the country has made releases five times, including in the wake of the Gulf War and the March 2011 earthquake and tsunami in northeastern Japan. While the Japanese government has been hesitant to tap into its stockpiles as it could deplete reserves kept for natural disasters, a senior industry ministry official said earlier it was “not an option” to refuse the U.S. request.

Japan, which relies on oil-producing countries in the Middle East for around 90% of its consumption, started keeping crude oil reserves in the 1970s.

Japan has three different types of oil stocks — state-owned, reserves held by companies and those stored with oil-producing countries. As a member of the International Energy Agency, the Japanese government is obliged to maintain oil reserves equal to 90 days of net imports in the previous year, while the quantity of private emergency stocks should be more than 70 days of its oil consumption in the previous year.

As of the end of September, Japan had reserves for 242 days of domestic consumption, of which 145 days’ worth were state-owned and 90 days held by the private sector, with the remaining volume jointly stored with oil-producing countries, according to the latest government data released this month.

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