(Bloomberg) – Japan plans to release oil from strategic stocks, joining China and the United States in a coalition of consumers who want to contain a surge in energy prices that has triggered higher inflation .
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“We are looking at measures we could act on, taking into account potential cooperation with related countries, including the United States,” Prime Minister Fumio Kishida told reporters on Saturday.
After the OPEC + oil producer cartel pushed back calls to produce more oil, US President Joe Biden sought international support to use stocks in consuming countries to drive down prices that have reached a seven-year high of $ 85 per barrel at the end of October. Rising energy costs are helping to accelerate price increases across the global economy, pushing politicians and central banks to action.
Read more: How US Presidents Use Strategic Oil Reserve: QuickTake
Earlier this week, China said it was working on a release of its strategic reserves, the second this year, after President Xi Jinping discussed energy at a virtual summit with Biden. With Japan on board, three of the world’s four biggest oil consumers are now considering the move, a significant diplomatic victory for the United States and a challenge for the grip of Saudi Arabia, Russia and others. OPEC + producers in the market.
Kishida’s remarks came after he unveiled a 56 trillion yen ($ 491 billion) tax package on Friday, which included support for companies grappling with rising fuel prices. Such measures are seen as an attempt to shoulder some of the burden as high crude prices spill over into the cost of gasoline, diesel and fuel to heat homes.
One option is to sell part of the oil reserves and use the funds generated as subsidies to curb rising gasoline prices, the Asahi newspaper reported yesterday. The government is also considering the possibility of reducing the number of days that oil reserves are supposed to last, Asahi said.
Currently, the government is required to keep an oil reserve sufficient to last at least 90 days, while those held in the private sector must last at least 70 days, according to the Asahi report.
The Biden administration has said it plans to release oil from strategic U.S. oil reserves as part of a series of moves to bring down gasoline prices, which have weighed on the rating of D approval of the president. Last week, the president asked the Federal Trade Commission to investigate whether market manipulation was contributing to gasoline prices.
Still, oil prices have plummeted in recent days, dropping nearly $ 3 a barrel in New York on Friday, in part because the threat of stock release pissed off investors, but also because of the possible impact on demand for the resurgence of coronavirus infections. It could relieve some pressure on Biden to go through with it, at least in the short term.
The new coalition of oil producers considering action will play a role in the deliberations of OPEC + ministers, who will hold their next meeting in early December.
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