The largest scale in history! Japan will release oil reserves from Thursday, and the first circumnavigation tanker is about to arrive in Japan

By Dong Jing

Source: Wallstreetcn

The release will amount to approximately 80 million barrels, equivalent to 45 days of Japan’s domestic demand, and 1.8 times the volume released after the 2011 Fukushima nuclear disaster. The unprecedented scale and urgency of the reserve release reflect Japan’s high alert over energy security. Japan’s first oil tanker taking an alternative route is expected to arrive on March 28, while the government launches a comprehensive review of its oil supply chain. Rising oil prices, combined with a weak yen, are exerting dual pressure on inflation and the Bank of Japan’s rate-hike path.

As the conflict involving Iran continues to disrupt shipping through the Strait of Hormuz, Japanese Prime Minister Sanae Takaichi has announced the largest-ever release of strategic petroleum reserves and ordered a full review of supply chains for petroleum-related products to stabilize domestic energy supply and prices.

On March 24, citing The Guardian, Takaichi announced that Japan will begin tapping its national strategic reserves this Thursday, March 26. The total release will reach around 80 million barrels, covering 45 days of domestic consumption — 1.8 times the amount released following the 2011 Fukushima nuclear disaster.

The scale and speed of the release underscore Japan’s deep concern over energy security, according to reports.

Higher oil prices have already intensified inflationary pressure, adding uncertainty to the Bank of Japan’s gradual rate-hike path toward policy normalization. Meanwhile, a persistent weak yen has further driven up import costs. Japanese Ministry of Finance officials have inquired about speculative activity in the crude oil futures market, fueling expectations of potential market intervention.

Separately, Trade Minister Ryosei Akazawa said on Tuesday, March 24, that the first Japanese oil tanker traveling via alternative routes is scheduled to arrive in Japan on March 28, Bloomberg reported.

## Record-High Reserve Release

Japan’s total oil reserve release will stand at roughly 80 million barrels, equal to 45 days of domestic consumption.

Last week, the Takaichi administration approved the release of 15 days’ worth of private-sector reserves, which began on March 16, according to Bloomberg. The release of national reserves will officially start on March 26.

For context, Japan held about 470 million barrels of oil reserves at the end of last year, equivalent to 254 days of domestic use. The latest release marks the largest single release in Japan’s history, at 1.8 times the volume deployed after the 2011 earthquake and tsunami that crippled the Fukushima Daiichi nuclear plant and led to the temporary shutdown of all Japan’s nuclear reactors.

Japan is a resource-scarce economy, relying on the Middle East for over 90% of its crude oil imports, most of which pass through the Strait of Hormuz. Since the outbreak of hostilities involving Iran on February 28, the vital waterway has been effectively paralyzed, placing severe strain on Japan’s energy supply chains.

## Full Supply Chain Review; First Diversion Tanker to Arrive This Week

Takaichi held a meeting with relevant cabinet ministers on Tuesday morning, including Foreign Minister Toshimitsu Motegi and Defense Minister Shinjiro Koizumi.

During the meeting, Takaichi tasked Akazawa with conducting a sweeping review of supply chains for petroleum-related products.

The review will cover not only energy-use petroleum products but also non-energy petrochemical derivatives such as naphtha — a key feedstock for plastics, whose stable supply is critical to the normal operation of Japan’s manufacturing sector.

On shipping, Akazawa confirmed on Tuesday that the first Japanese oil tanker using alternative routes is expected to dock on March 28.

Tanker-tracking data compiled by Bloomberg showed that the supertanker *Omega Trader*, managed by Mitsui O.S.K. Lines Ltd., had passed through the Strait of Hormuz, but the company denied that the vessel had completed such a voyage.

## Dual Pressure on Inflation and Exchange Rate Hinders BOJ Policy Normalization

The post-conflict surge in oil prices is expected to worsen inflation in Japan, complicating the Bank of Japan’s efforts to normalize policy through gradual interest rate hikes.

As reported by Wallstreetcn, Japan’s core inflation gauge fell to 1.6% in February, dropping below the BOJ’s 2% target for the first time in nearly four years. However, economists expect price growth to reaccelerate starting in March.

Meanwhile, the ongoing yen weakness continues to push up Japan’s oil import costs.

Ministry of Finance officials have warned against suspected exchange-rate-distorting speculation in the crude oil futures market, and authorities have reportedly questioned market participants regarding potential intervention in the crude oil futures market.

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