The largest-scale release in history! Japan will start releasing oil reserves on Thursday, and the first diverted oil tanker is about to arrive in Japan.

Ask AI · How the Iran War Prompted Japan to Initiate the Largest Oil Reserve Release in History?

As the Iran War continues to impact shipping in the Strait of Hormuz, Japanese Prime Minister Sanae Takaichi announced the initiation of the largest strategic oil reserve release in history and ordered a comprehensive review of the supply chain for oil-related products to stabilize domestic energy supply and prices.

On March 24, according to The Guardian, Takaichi announced that Japan will begin utilizing its national strategic reserves on Thursday (March 26), with a release scale of approximately 80 million barrels, equivalent to 45 days of domestic demand in Japan, and 1.8 times the amount released after the Fukushima nuclear disaster in 2011.

Reports indicate that the scale and urgency of this reserve release reflect Japan’s heightened vigilance regarding energy security.

Rising oil prices have increased inflationary pressures, creating greater uncertainty for the Bank of Japan’s gradual interest rate normalization path; meanwhile, the continued weakness of the yen further raises import costs, and Japanese finance ministry officials have begun inquiries into speculative movements in the crude oil futures market, with expectations of market intervention increasing.

At the same time, Bloomberg reported that Trade Minister Ryosei Akazawa stated on Tuesday (March 24) that the first Japanese tanker using an alternative route is expected to arrive in Japan on March 28.

Record-Breaking Reserve Release Scale

Reports indicate that the total amount of oil reserves released by Japan is approximately 80 million barrels, equivalent to 45 days of domestic consumption.

The Takaichi government approved the release of 15 days’ worth of reserves from private enterprises last week; according to Bloomberg, the release of private reserves has already begun as of March 16, while the release of national reserves will officially start on March 26.

For reference, Japan held approximately 470 million barrels of oil reserves as of the end of last year, equivalent to 254 days of domestic consumption. This release scale is 1.8 times the amount released after the 2011 Great East Japan Earthquake and tsunami severely affected the Fukushima Daiichi Nuclear Power Plant, leading to the temporary shutdown of all nuclear power plants in Japan, setting a record for the highest single reserve release in Japan’s history.

Japan is an economy extremely lacking in resources, relying on the Middle East for over 90% of its crude oil, with the vast majority needing to be transported through the Strait of Hormuz. Since the outbreak of the Iran War on February 28, this critical waterway has effectively been paralyzed, placing enormous pressure on Japan’s energy supply chain.

Comprehensive Supply Chain Review, First Tanker Using Alternative Route Arrives This Week

According to reports, Takaichi convened a meeting of relevant ministers on Tuesday morning, attended by Foreign Minister Toshimitsu Motegi and Defense Minister Shinjiro Koizumi.

At the meeting, Takaichi assigned the task of comprehensively reviewing the supply chain for oil-related products to Ryosei Akazawa.

Akazawa’s review scope covers not only energy-related petroleum products but also extends to non-energy petroleum derivatives such as naphtha—naphtha is a key raw material in plastic manufacturing, and its supply stability directly affects the normal operation of Japan’s manufacturing sector.

In terms of shipping, Akazawa stated on Tuesday that the first Japanese tanker using an alternative route is expected to arrive in Japan on March 28.

According to tanker tracking data compiled by Bloomberg, the supertanker “Omega Trader” managed by Mitsui OSK Lines Ltd has passed through the Strait of Hormuz, but Mitsui OSK Lines denied that the vessel completed the aforementioned voyage.

Dual Pressure from Inflation and Exchange Rates, Central Bank’s Policy Normalization Hampered

Reports indicate that the rise in oil prices following the outbreak of war is expected to exacerbate inflationary pressures in Japan, complicating the Bank of Japan’s efforts to advance policy normalization through gradual interest rate hikes.

According to a Wall Street Journal article, Japan’s core inflation index fell to 1.6% in February, dipping below the central bank’s 2% target for the first time in nearly four years, but economists expect price increases to accelerate again starting in March.

Meanwhile, the continued weakness of the yen will further raise Japan’s oil import costs.

Reports indicate that finance ministry officials have issued warnings regarding suspected speculative behaviors in the crude oil futures market that may impact exchange rates, and authorities have reportedly begun inquiries with market participants about the potential for intervening in the crude oil futures market.