The Japan Oil Association has called on the government to initiate a second round of strategic reserve releases, with a scale comparable to the first batch, while actively seeking alternative supply sources outside the Middle East to address the energy security pressures arising from the ongoing tensions in the Strait of Hormuz.
The president of the Japan Oil Association stated on Monday that he hopes the Japanese government will release the second batch of strategic reserves at the same scale as the first. Previously, the Japanese government announced on March 13 that it would initiate the release of approximately 80 million barrels of national and private strategic oil reserves.
Regarding supply diversification, the association's president pointed out that North America is one of the potential sources to replace Middle Eastern crude oil supplies and believes Japan should invest in expanding Alaskan crude oil production capacity; Ecuador, Colombia, and Mexico were also listed as possible options.
Meanwhile, the association clearly stated that Japan has no plans to procure Russian crude oil, except for the Sakhalin-2 project.
<h2>The first batch of releases has begun, and pricing mechanisms are under scrutiny</h2>
On March 13, the Japanese government announced that it would begin releasing approximately 80 million barrels of national and private strategic oil reserves as early as next week, with this batch of crude oil being sold at the official selling prices (OSP) set by Middle Eastern oil-producing countries before the outbreak of the conflict.
OSP is typically set monthly by Middle Eastern oil-producing countries for long-term contracts, with specific prices varying by crude oil grade. The determination method adjusts the price differential based on the benchmark crude oil price and is calculated comprehensively in conjunction with the market supply and demand conditions of the month.
In terms of pricing execution, Japan's Minister of Economy, Trade and Industry, Akazawa Ryoji, has explicitly warned domestic refiners against profiting excessively from the low-priced national reserve crude oil, stating that the government will continue to communicate with the industry to ensure that this release is conducted in a &#34;reasonable and convincing manner&#34; as perceived by the public, aiming to pass on cost advantages to end consumers.
<h2>Diversification layout: North America and Latin America as alternative options</h2>
Since the escalation of the conflict in the Middle East, international oil prices have surged significantly. On February 27, just before the conflict escalated, the global benchmark Brent crude oil closed at $72.48 per barrel, and it has now risen to $108 per barrel. The market generally expects that if the Strait of Hormuz remains effectively closed and the situation does not ease, oil prices will continue to face upward pressure.
The president of the Japan Oil Association admitted that he never anticipated the closure of the Strait of Hormuz, as this would trigger a global energy crisis. This statement highlights the unexpected extent of the impact of this situation on the global energy market and further underscores the urgency for Japan to accelerate the diversification of its supply sources.
In the face of the risk of supply disruptions from the Middle East, the Japan Oil Association is actively seeking alternative sources. The association's president stated that North America is one of the potential sources to replace Middle Eastern crude oil supplies and suggested that Japan invest in expanding Alaskan crude oil production capacity to fundamentally enhance the diversification of supply sources.
Additionally, Ecuador, Colombia, and Mexico have also been listed as possible alternative options. Regarding Russian crude oil, the association's position is clear—Japan has no plans to procure Russian crude oil, except for the Sakhalin-2 project

CRAK

The crisis in the Strait of Hormuz continues to escalate, with Brent crude oil soaring from $72 to $108 per barrel. The Japan Oil Association urgently calls on the government to initiate a second round of strategic reserve releases, matching the scale of the first batch of 8 million barrels, while listing North America, Alaska, and Latin America as alternative supply options to accelerate the reduction of dependence on Middle Eastern crude oil

- The Japan Petroleum Association has urged the government to initiate a second round of strategic reserve releases equivalent to the first, amid ongoing tensions in the Strait of Hormuz affecting energy security.  
- The government previously announced the release of approximately 80 million barrels of strategic oil reserves, with pricing tied to pre-conflict official sales prices set by Middle Eastern producers.  
- The association highlights North America, alongside Ecuador, Colombia, and Mexico, as potential alternative oil supply sources, affirming no plans to purchase Russian oil except for the Sakhalin-2 project.

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Japan Petroleum Association: A second release of oil reserves is needed, with a scale comparable to the first batch of 80 million barrels