Japan's government has confirmed it was considering a release of crude oil from its strategic reserve in a marked departure from its initial reaction to U.S. President Joe Biden's idea of a concerted release by several countries.
Reuters reported that Japan had plans for a crude oil release from its strategic reserve earlier today, citing unnamed sources. Japan's law prohibits the release of oil from the reserve except in a situation with a shortage or in a natural disaster. One source told Reuters that the government was looking for a loophole in the law. Another said, "We have no choice but to come up with something."
Later, Reuters cited Kyodo news agency as saying the government was indeed considering such a move despite the legislative challenges.
"We're proceeding with consideration as to what we can do legally on the premise that Japan will coordinate with the United States and other countries concerned," Prime Minister Fumio Kishida told media. "We want to draw a conclusion after thoroughly considering the situation each country faces and what Japan can do," he added.
Media reported last week that President Biden had approached China, Japan, South Korea, and India with the suggestion to all release oil from their strategic reserves to counter rising prices. Soon after these reports, it emerged that China was already planning a reserve release, with official sources stopping short of disclosing whether this was a result of Biden's lobbying or an earlier plan.
India rejected the idea on the grounds it would not do much good, even though the country is among the most dependent on imported oil. South Korea also seemed reluctant to tap its strategic reserves. In the U.S., the move has been discussed, but analysts are of the opinion that it would be ineffective.
In the meantime, oil prices have been falling as concern about new lockdowns in Europe was rekindled by rising Covid-19 infection numbers. At the time of writing, both Brent crude and West Texas Intermediate were trading below $80 per barrel, with Brent at $78.80 and WTI at $75.91.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
U.S. Power and NatGas Prices Plummet to Below Zero
Ukrainian Drones Hit Major Rosneft Refinery in Russia
First Niger Oil Bound for China Blocked in West Africa Border Row
Gas Prices Likely to Keep Falling Ahead of Peak Driving Season
Drone Attacks Take Khor Mor Gas Field Offline, Claims Lives