TOKYO: Japan’s government is considering intervening in the crude oil futures market as the Middle East crisis drives energy prices up sharply, market sources said on Monday. The move, if agreed, would follow Japan’s decision to make the largest release of oil reserves to date, in coordination with other nations, to ease shortages as the US-Israeli war on Iran has disrupted oil supplies.
Government inquiries were made regarding specific methods for intervening in the crude oil futures market, one source said.
Previously, the heads of a number of top exchanges have said they opposed any potential intervention from the US government in the oil futures market, as energy prices climbed after the US and Israel launched attacks on Iran.
Oil prices have spiked to their highest levels since early 2022 - when Russia invaded Ukraine - as the Strait of Hormuz, a major supply route for global oil and LNG, remains closed.
Japan is in a highly vulnerable position as it sources more than 90% of its oil supply from the Middle East and the yen currency is weak.
The Ministry of Finance in Tokyo did not immediately respond to a request for comment about the reported operations in oil markets. Earlier on Monday, Japan’s top currency diplomat Atsushi Mimura said the government was prepared to take all measures to tackle volatility in the foreign exchange market, cautioning that speculative trade on oil futures could be impacting currencies.
As Japan is battling record gasoline prices and beginning to see the impact on consumers from the spiking cost of energy imports and shortages, the Petroleum Association of Japan, the industry group representing the country’s major oil refiners, suggested more stockpile releases should be made.
The International Energy Agency is consulting with governments in Asia and Europe on the release of more stockpiles “if necessary”, its executive director said, while adding that it would help calm the markets but “is not the solution”.
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