(March 13): Japan will sell oil from its national reserves at prices based on levels before the start of the Middle East war, according to the country’s trade minister.
The country announced this week it would release about 80 million barrels of oil from its state and private reserves, and it could start as soon as next week. The crude would be sold at levels based on the pre-conflict official selling prices of Middle Eastern producers, Minister of Economy, Trade and Industry Ryosei Akazawa said on Friday.
Global benchmark Brent closed at US$72.48 ($92.78) a barrel on Feb 27 before the outbreak of the war. It’s since climbed to around US$101 and could rise a lot higher if there’s no quick resolution to the conflict and the Strait of Hormuz remains effectively closed.
The government “expects refiners that purchase crude at low prices won’t then sell their products at higher prices and pocket the profit”, Akazawa said at a press conference in Tokyo. “The country will stay in communication with the refiners to ensure that the release of national reserves is conducted in a way that the public can see as reasonable and convincing.”
Japan’s unilateral release comes as the International Energy Agency coordinates a massive 400-million-barrel discharge from developed nations. The Paris-based group has described the energy crisis caused by the Iran war as the biggest-ever disruption in the global oil market.
Akazawa left open the possibility that surplus petroleum products made from the crude in the reserves could be shipped overseas if domestic demand isn’t strong enough. “Exporting is not prohibited under the measure,” he said.
See also: Trump and Iran strike defiant tone as oil markets see little relief
Middle Eastern producers set official selling prices for oil supplied under long-term contracts each month. The official selling prices vary depending on the grade of crude, and are calculated by adjusting price differentials to established benchmarks and taking into account market conditions at the time.
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