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Resource-poor Japan, a major importer of crude oil and natural gas, is increasingly concerned that the rally in oil prices would slow the global economic recovery, a senior government official told the head of the International Energy Agency (IEA) this week.
Hikariko Ono, Director General of Economic Affairs Bureau at the Ministry of Foreign Affairs of Japan, “expressed concern over the rapid surge in crude oil prices, which could hamper the global economic recovery from COVID-19,” Japan’s foreign ministry said in a statement after a video conference between Ono and the IEA’s Executive Director Fatih Birol.
“Japan is engaged in dialogues with oil-producing countries and would like to work closely with the IEA, which plays a central role in stabilizing the energy market,” the Japanese ministry added.
Japan was said to have approached OPEC producers and their partners in OPEC+ with a request for more oil production before the latest meeting of the alliance in early November.
OPEC+, however, snubbed last week calls from importers, including the United States, and decided to stick to a gradual easing of the cuts by adding just 400,000 barrels per day (bpd) to supply in December.
Despite currently tight balances, OPEC+ and its leader Saudi Arabia believe that cautious easing of the cuts is the right approach, considering that the oil market is expected to tip into surplus next year.
Another interesting point from the Japan-IEA video meeting this week was that the IEA’s Birol highlighted “the need for additional investment to meet future demand, explaining that the demand for oil and natural gas will not drastically decrease even through our path towards transition to renewable energy,” per the Japanese ministry’s statement.
That’s a stark difference from one of the IEA’s pathways to net-zero, which suggested earlier this year that no new investment in oil and gas would be necessary after 2021 if the world wants to achieve net-zero emissions by 2050.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com