US to release oil from reserves with Japan, China, and more
WASHINGTON (Kyodo) – The United States will release 50 million barrels of oil from its emergency reserves in coordination with other major energy-consuming countries such as Japan and China to deal with rising prices , the White House announced on Tuesday.
Japan plans to use excess state-owned stocks, which would be the first exploitation of oil reserves in an attempt to drive down prices by the resource-poor country.
The US announcement follows weeks of consultations with countries around the world, the White House said, as soaring prices for gasoline and other petroleum products hit households and businesses already grappling with the impact of the coronavirus pandemic. India, South Korea and Britain are also among the countries taking action.
“This is the first time that we have done something like this in parallel with other major energy consuming countries,” said a senior US administration official under President Joe Biden.
The increase in gas prices has occurred in part because the global supply of oil has not kept pace with global demand for oil as the economy has recovered from the coronavirus pandemic while countries and companies were holding back from supplying oil, another official said.
Of the 50 million barrels of oil that the United States will make available to its strategic oil reserve, 32 million barrels will be loaned to oil companies and 18 million barrels will be supplied through an oil sale that Congress previously had. authorized.
The Strategic Petroleum Reserve is the world’s largest reserve of emergency crude oil with more than 600 million barrels of oil, according to the US government.
“The president is ready to take further action, if necessary, and is ready to use his full authority in coordination with the rest of the world to maintain an adequate supply as we emerge from the pandemic,” the White House said.
As for Japan, the amount of oil that will be initially released should be equivalent to several days of consumption, according to a government official.
In Japan, past decisions to mine reserves have been made in response to supply issues following natural disasters and political unrest abroad. The country has posted five times so far, most notably in the aftermath of the Gulf War and the March 2011 earthquake and tsunami in northeastern Japan.
While the Japanese government has been reluctant to dip into its stocks because it could deplete reserves set aside for natural disasters, a senior industry ministry official said earlier that it was “not an option” to refuse the American request.
Japan, which depends on oil-producing countries in the Middle East for about 90% of its consumption, began to hold onto crude oil reserves in the 1970s.
Japan has three different types of oil stocks: state reserves held by companies and those stored with oil-producing countries.
As a member of the International Energy Agency, the Japanese government is obliged to maintain oil reserves equal to 90 days of net imports from the previous year, while the amount of emergency private stocks is expected be greater than 70 days of its previous year’s oil consumption. year.
At the end of September, Japan had reserves for 242 days of domestic consumption, of which 145 days belonged to the state and 90 days to the private sector, with the remaining volume being stored jointly with oil-producing countries, according to the latest government data released this week. this month.
Markets had reacted to speculation that the United States and other countries would release oil from their reserves, pushing energy prices lower recently.