Japan plans to release 80 million barrels of oil next week, selling at prices before the outbreak of the Middle East conflict

The Japanese government announced that it will begin releasing approximately 80 million barrels of national and private strategic oil reserves as early as next week. This batch of crude oil will be sold at the official selling price (OSP) prior to the outbreak of conflict, as set by Middle Eastern oil-producing countries. On February 27, just before the escalation of the conflict in the Middle East, the global benchmark Brent crude oil closed at $72.48 per barrel, and has continued to rise since the outbreak of the conflict, currently reaching $101 per barrel. The market generally expects that if the Strait of Hormuz remains effectively closed and the situation does not ease, oil prices will still face further upward pressure. Against this backdrop, the "official selling price" (OSP), which serves as the pricing benchmark for Japan's release of reserves, has attracted significant attention. Typically, Middle Eastern oil-producing countries set the OSP for long-term contracts on a monthly basis, with specific prices varying by crude oil grade. The determination method involves adjusting the price differential based on the benchmark crude oil price and comprehensively calculating it in conjunction with the market supply and demand conditions for that month. Japan's Minister of Economy, Trade and Industry, Akizawa Ryozo, explicitly warned domestic refiners on Friday that they must not profit excessively from the low-priced national reserve crude oil. He stated that the government will continue to communicate with the industry to ensure that this release is carried out in a manner that is "reasonable and convincing to the public," aiming to pass on the cost advantages to end consumers. At the same time, Akizawa left room for the export of refined products processed from reserve crude oil, stating that if domestic demand is insufficient, "this measure does not prohibit exports," thereby retaining policy flexibility for Japan amid global supply tightness. Japan's unilateral action is being carried out in parallel with the International Energy Agency (IEA)'s coordinated plan to release 400 million barrels of emergency reserves. The IEA has characterized the energy crisis triggered by the Iranian war as the largest supply disruption in the history of the global oil market. If the Strait of Hormuz remains effectively closed and the conflict is not resolved quickly, there is still a risk of further significant increases in oil prices.