New Delhi, March 25: Japan’s government will begin releasing oil from its reserves starting Thursday due to ongoing tensions in the Hormuz Strait, where Iran maintains a stronghold. This initiative is part of a larger plan to extract a total of 45 days’ worth of oil, marking the largest release to date. Additionally, oil will be drawn from private sector stocks to ensure uninterrupted operations in the world’s fourth-largest economy.
Japan possesses one of the largest oil reserves globally, with a combined total of approximately 254 days’ worth of consumption from both government and private stocks. However, the country still imports over 90% of its crude oil from the Middle East, making it vulnerable amid the ongoing conflict involving Iran, the U.S., and Israel.
While the government has so far avoided strict energy-saving regulations, it has issued warnings about the rapidly increasing demand for toilet paper amid supply concerns. As fuel prices soared to a record high of 190 yen (approximately $1.20) per liter, Japan initiated subsidies on fuel products to keep gasoline prices around 170 yen (about $1.07) per liter.
When it comes to energy shortages, Japan is better prepared compared to many of its neighbors, having learned from the oil shocks of the 1970s. The global economy was affected by stagflation during that decade, beginning with the 1973 oil crisis. Following the Yom Kippur War, Arab oil producers cut supply and raised prices, causing crude oil prices to quadruple within months, which severely impacted Japan’s import-dependent economy.
The consequences were dire. Japan relied heavily on imports for its oil, leading to a sudden halt in economic growth post-war. Panic buying ensued, and in 1974, Japan’s economy contracted for the first time since World War II, marking the start of a period of slow growth.
The 1979 oil crisis further escalated prices. However, by that time, Japan had begun to adapt by investing in energy efficiency, diversifying energy sources, and building strategic reserves.
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