Japanese and Indian officials are working on ways to free up national crude oil reserves in tandem with the United States and other major economies to bring prices down, seven government sources with knowledge of the plans told Reuters.
US President Joe Biden has asked China, India, South Korea and Japan for a coordinated release of oil stocks as US gasoline prices soar and its ratings approval drops ahead of next year’s midterm elections.
The demand came after the US government was unable to persuade OPEC + to pump more oil, with major producers arguing that the world has no shortage of crude.
Japanese Prime Minister Fumio Kishida has signaled that he is ready to release stocks over the weekend.
Three Indian government sources said on Monday they were holding consultations with the United States on releasing oil from strategic reserves.
Japan, the world’s fourth-largest buyer of oil, is limited on how it can act with its reserves – made up of both private and public stocks – which can usually only be used in times of scarcity.
A Japanese source said the government is considering releasing the portion of state-owned shares outside the required minimum amount as a legal workaround.
Japanese authorities are also reviewing private stocks in the national reserve, which some advisers say can be released without restrictions, a second source said.
The reserves of Japanese oil companies were exploited during the Gulf War of 1991 and following the earthquake and tsunami of 2011.
Brent crude was down 0.7% on Monday due to looming lockdowns in Europe and plans to release oil.
Japan’s oil reserves held 145 days of daily oil consumption at the end of September, according to official data, well above the 90-day minimum required by law.
Japanese private companies, including refiners, hold around 175 million barrels of crude and petroleum products as part of the Strategic Petroleum Reserve (SPR), enough to consume around 90 days, according to the agency. ‘Jogmec state, also exceeding the minimum requirement of 70 days.
India holds around 26.5 million barrels of oil in the SPR.