Japan plans to auction in February 629,000 barrels of crude oil from its national reserves as part of a U.S.-led global effort by oil-consuming nations to lower prices.
Japan’s government will sell the crude to the winning bidder on or after March 20, the industry ministry said on Monday in a statement cited by Reuters.
“This is the first round of the planned releases and we will conduct more auctions when we are ready and while we closely watch the international energy markets,” an industry ministry official told Reuters.
Japan’s announcement of a government tender follows closely last week’s news from South Korea, which said it would release 3.17 million barrels of its oil reserves in the first quarter of 2022 as part of the coordinated reserve releases.
Just over 2 million barrels of the release will be crude and will go to local refiners via loan agreements, and the other 1.09 million barrels will be petroleum products released via a bidding process to the highest bidder, South Korea said on Thursday.
U.S. President Joe Biden said at the end of November that the Department of Energy would release 50 million barrels of oil from the SPR in a bid to lower high gasoline prices in a coordinated effort with other major oil-consuming nations. The SPR release from the United States will be carried out in parallel with other major energy-consuming nations, including China, India, Japan, South Korea, and the UK.
Despite the seemingly big number, 50 million barrels, the U.S. release actually equals around two and a half days of American petroleum consumption, which was at 20.5 million barrels per day (bpd) in the pre-pandemic 2019.
The other countries are going for much smaller releases, and the message seems to be that major oil consumers are coordinating efforts to try to lower high prices, while OPEC+ sticks to its guns over its oil production plan.
The oil market had already largely priced in SPR releases, with prices sliding before the official announcement. Analysts have also pointed out that one-off sales from strategic reserves cannot do much to move oil prices significantly lower.