The world's third-largest strategic crude oil reserve! Is Japan about to "release oil"?

The ongoing Iran crisis continues to impact global energy supplies, with Japan on the brink of releasing its strategic petroleum reserves.

According to Reuters, on Sunday, opposition lawmaker Akira Nagatsuma stated that the government has instructed the national oil reserve facility in Shibushi, Kagoshima Prefecture, to prepare for oil release. This is the most explicit signal from Japan’s official level to date.

Bloomberg Energy and Commodities columnist Javier Blas quickly posted on X, suggesting that Japan may take action within the next 24 hours, possibly bypassing the United States and the International Energy Agency (IEA) to act independently.

Japan is the third-largest holder of strategic petroleum reserves in the world, after China and the United States. If this release occurs, it will be Japan’s first use of national oil reserves since the Russia-Ukraine conflict in 2022, and its first consideration of releasing reserves independently without relying on the IEA coordination mechanism.

Strait of Hormuz effectively closed, Japan’s supply chain under pressure

The immediate trigger for the reserve release discussion is the disruption of Middle Eastern oil supplies caused by the Iran crisis.

Reuters reports that about 95% of Japan’s oil imports come from the Middle East, with approximately 70% transported through the Strait of Hormuz. Following attacks by the U.S. and Israel on Iran, the Strait has effectively closed, putting Japan’s oil supply chain under severe stress.

In this context, the Agency for Natural Resources and Energy (ANRE), under Japan’s Ministry of Economy, Trade and Industry, issued a wartime readiness order last Friday to the Shibushi National Oil Reserve Base. Officials from the Japan Oil, Gas and Metals National Corporation (JOGMEC), which manages the base, confirmed this to Nagatsuma. However, Nagatsuma stated that the specific timing of the release remains unclear, and it is also uncertain whether other reserve bases have received similar instructions.

Earlier, Economy Minister Ryosei Akazawa said there are no concrete plans to release oil reserves at this time but that the situation will be closely monitored and coordinated with the IEA. However, Kyodo News reported on Friday that the Japanese government is considering releasing part of its national oil reserves and may coordinate with other countries or act alone.

Reserve Scale: Large on Paper, Supply Disruption Changes Everything

Japan’s strategic petroleum reserves are significant on a global scale, but their actual buffering capacity is being questioned.

Javier Blas cites official data indicating that the Japanese government holds about 260 million barrels of oil across 10 storage facilities, including surface tanks, underground tanks, floating tanks, and cavern storage. Additionally, Japan mandates private sector oil stocks and has joint storage agreements with Saudi Arabia, the UAE, and Kuwait, which contribute an extra approximately 178 million barrels.

Combining government reserves, private stocks, and joint reserves, Japan’s total oil reserves amount to about 440 million barrels, equivalent to roughly 204 days of imports, with a face value close to the U.S. Strategic Petroleum Reserve (about 415 million barrels).

However, some analysts point out that the real significance of this figure needs to be reassessed—since 95% of oil supplies pass through the Strait of Hormuz, once the supply line is cut, 204 days of reserves are no longer a buffer but a countdown.

Independent Action: Japan May Bypass the IEA and Release Reserves Alone

The most notable market signal in the reserve release discussion is the possibility that Japan might choose to act independently, without relying on the IEA coordination mechanism.

Javier Blas explicitly stated on X, “The real story to watch is Tokyo acting alone without U.S. coordination.” This marks a clear departure from Japan’s past practice—its last use of oil reserves was in 2022, as part of an IEA-coordinated release to address energy market shocks from the Russia-Ukraine conflict.

If Japan proceeds with unilateral action this time, it will represent a significant shift in its post-war energy policy and send a message to the market about Japan’s independent assessment of the severity of the current supply crisis.

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