Amanze Chinonye
Japan has begun preparations for a possible release of crude oil from its strategic petroleum reserves as concerns mount over disruptions to Middle East energy supplies.
Government authorities have instructed the Shibushi national oil storage facility in Kagoshima Prefecture to prepare for a potential drawdown of crude from state-controlled reserves, according to verified reports.
The instruction was reportedly issued through the Agency for Natural Resources and Energy under the Ministry of Economy, Trade and Industry, which oversees the country’s emergency energy stockpiles. Industry sources say Japanese refiners are already lobbying the government to consider tapping the reserves if supply disruptions worsen.
Join our WhatsApp ChannelJapan’s emergency oil buffer is among the largest in the world. Combined government and private reserves are estimated to cover roughly 254 days of domestic consumption, with about 146 days stored in government-controlled underground facilities operated by the Japan Organization for Metals and Energy Security.
Dependence on Middle East oil
Japan remains heavily reliant on imported crude, with more than 90 percent sourced from the Middle East. A significant portion of those shipments travels through the strategically critical Strait of Hormuz, a narrow maritime passage that links the Persian Gulf to global markets.
Any disruption to shipping through the corridor can have immediate consequences for Japan’s energy security.
Market volatility linked to tensions in the region has already reverberated across financial markets. Japan’s benchmark stock index, the Nikkei 225, recorded sharp losses during recent trading sessions, while oil prices surged above $100 per barrel amid fears of supply shortages.
READ ALSO : Insurance Retreat, Iraq Warning, China’s Pressure Deepen Strait of Hormuz Crisis
Strategic reserves built after the 1973 oil shock
Japan developed its strategic petroleum reserve system following the 1973 Arab oil embargo, which exposed the country’s vulnerability to geopolitical disruptions in energy supply.
The crisis prompted Tokyo to build extensive underground storage caverns and mandate private stockpiling. Major storage locations include facilities in Tomakomai, Mutsu-Ogawara, Shibushi and Kushikino, designed to ensure the country could withstand prolonged supply shocks.
The stockpile system was built primarily as an emergency buffer to guarantee supply in the event of severe disruption rather than as a tool for managing market prices.
Analyst links crisis to insurance restrictions
According to economic analyst Anslem, the current situation reflects a new kind of vulnerability in global energy supply chains.
He argued that Japan’s preparations are unfolding under unusual circumstances not triggered by war or a physical blockade but by financial constraints within the maritime insurance system.
Anslem said several Protection and Indemnity (P&I) insurance clubs reportedly withdrew war-risk extensions for tankers operating in the Persian Gulf on March 5 under European regulatory capital requirements linked to the Solvency II framework.
Without such coverage, he noted, oil cargoes may face legal and financial barriers to delivery, as tankers lacking adequate insurance cannot secure letters of credit or complete customs clearance in importing countries.
“The physical barrel may exist on the tanker, but the legal barrel does not,” he said, describing how disruptions in insurance coverage could stall shipments even if oil continues to be transported.
A system rarely activated
Japan has historically been cautious in deploying its emergency stockpile.
While the country has participated in coordinated releases organised by the International Energy Agency including the release of several million barrels from private stocks following the 2022 Russian invasion of Ukraine the government-controlled portion of its reserves has rarely been used.
Energy analysts note that activating the national reserve would represent a significant step in Japan’s energy security policy.
For now, officials say the Shibushi facility has only been instructed to prepare for a possible drawdown, with the final decision dependent on whether Middle East supply disruptions intensify in the coming weeks.
Amanze Chinonye is a Staff Correspondent at Prime Business Africa, a rising star in the literary world, weaving captivating stories that transport readers to the vibrant landscapes of Nigeria and the rest of Africa. With a unique voice that blends with the newspaper's tradition and style, Chinonye's writing is a masterful exploration of the human condition, delving into themes of identity, culture, and social justice. Through her words, Chinonye paints vivid portraits of everyday African life, from the bustling markets of Nigeria's Lagos to the quiet villages of South Africa's countryside . With a keen eye for detail and a deep understanding of the complexities of Nigerian society, Chinonye's writing is both a testament to the country's rich cultural heritage and a powerful call to action for a brighter future. As a writer, Chinonye is a true storyteller, using her dexterity to educate, inspire, and uplift readers around the world.
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