Japan started a sale of oil from its strategic reserves to combat rising prices with a modest sale, joining an unprecedented coordinated release of crude from strategic stockpiles that has been led by the US.
A government tender offered Oman crude from the strategic reserves in Shibushi for delivery between March and June next year, the Japanese Ministry of Economy, Trade and Industry said in a statement.
The move is part of Japan’s plans to sell oil in coordination with other consuming nations and more sales might follow, said a ministry official, who declined to be identified because of internal policy.
Photo: Kyodo via Reuters
A second statement said that the volume offered was 100,000 kiloliters, or only the equivalent to about 630,000 barrels.
Last year, Japan consumed about 3.27 million barrels a day, according to figures from BP PLC.
US President Joe Biden’s administration started tapping the first of its pledged 50 million barrels of reserves not long after announcing the coordinated release late last month. South Korea last week said that it would start releasing crude and oil products from its strategic reserves next month, although other countries named as part of the plan — including China and India — have yet to act.
Japanese Minister of Economy, Trade and Industry Koichi Hagiuda last month said that Japan would conduct the release as it replaces oil in its stockpiles.
While it does that regularly, the schedule has been moved up to support similar actions elsewhere, he added.
At present, there are signs of weakening oil demand in Asia given the rapid spread of the Omicron variant of SARS-CoV-2 and strength in the US dollar.
Brent crude, the global benchmark, yesterday traded below US$76 a barrel, and it is down by about 7 percent since the US-led plan was announced.
West Texas Intermediate, which did not trade on Friday due to a US holiday, also fell, while an advance in the US dollar reduced the appeal of commodities like oil that are priced in the currency.
Crude’s rally from the depths of the COVID-19 pandemic has run into considerable headwinds in the past couple of months as investors sized up the challenge to demand posed by Omicron.
At the same time, OPEC and its allies have kept boosting supplies, and the US has led the coordinated release of oil from national strategic reserves.
“Even if Omicron is less virulent, it appears its contagiousness has the potential to disrupt the flow of goods and services as workers isolate,” Oanda Asia Pacific Pte senior market analyst Jeffrey Halley said.
That would imply lower levels of oil consumption, he said.
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