Japan and South Korea Release Oil Reserves to Stabilize Global Markets

The governments of Japan and South Korea decided to tap into their oil reserve stocks in response to reduced supply from the Persian Gulf, in order to stabilize the market and prevent sharp price increases.

According to NHK, Japanese Prime Minister Sanae Takai announced that an initial 15-day stock would be released from oil company storage facilities, followed by a one-month stock from strategic government reserves.

A record 80 million barrels from the country’s oil reserves are expected to reach the market.

Takai also announced the decision to keep retail gasoline prices at 170 yen per liter (about $1.07). This is achieved through government subsidies to wholesale fuel buyers – the difference between the price of gasoline on the exchange and the target level of 170 yen.

South Korea plans to release 22.46 million barrels of oil from its strategic reserves in response to the International Energy Agency’s decision to supply 400 million barrels from member countries’ stockpiles, in order to curb price increases amid the Middle East conflict and the closure of the Strait of Hormuz.

Context of Japan’s actions and expected effects

Analysts estimate that each country’s contribution to the joint actions with the IEA depends on its level of consumption. South Korea’s share accounts for 5.6% of the total 400 million barrels that will be released onto the market.

“South Korea believes that close cooperation with the IEA this time will largely help stabilize the international oil market. Going forward, we plan to minimize the effects of negative factors on the economy and prices for the population by closely working with leading countries to respond to the high oil price caused by the situation in the Middle East”

Reaction of regional partners and China

At the same time, China does not plan to use its strategic oil reserves. The Chinese government expresses confidence in the stability of crude oil supply and aims to support the market despite expected declines in supply from the Persian Gulf region.

According to the agency, the IEA has decided to release 400 million barrels of crude oil from member countries’ strategic reserves to curb price increases amid the armed conflict in the Middle East and the closure of the Strait of Hormuz.