TOKYO - The government has instructed domestic oil reserve bases to prepare for a possible release of stockpiled crude as tensions surrounding the Middle East raise concerns about energy supply and the broader industrial impact, including disruptions to ethylene production used in food packaging.
The Nikkei Stock Average, which recorded a historic drop on June 9th, rebounded sharply after U.S. President Donald Trump told reporters the same day that military operations in Iran were expected to end “soon.”
As investors began to see the possibility that the worsening geopolitical situation might not drag on, crude oil prices reversed course and began to fall, prompting widespread buying across a broad range of stocks.
Against this backdrop, it has emerged that the Japanese government instructed domestic oil stockpile bases to prepare for a potential release.
Japan maintains 10 national petroleum reserve bases, and when combined with reserves held at privately operated facilities, the country has oil stockpiles equivalent to about 254 days of supply.
According to people familiar with the matter, the government has issued instructions to prepare for a release if necessary.
At an emergency meeting of finance ministers from the G7 major economies, participants also agreed to take necessary measures toward a coordinated release of oil reserves.
Meanwhile, the impact of the potential closure of the Strait of Hormuz is beginning to spread across industries.
Naphtha, a petroleum product obtained during the refining process, is used to produce ethylene, a key raw material for plastic products including food packaging. More than 70% of Japan’s naphtha imports come from the Middle East.
Major chemical manufacturer Mitsubishi Chemical has already begun reducing ethylene production.
Idemitsu Kosan has also notified its business partners that it may suspend operations at its ethylene production facilities, raising concerns that the effects could spread further across supply chains.
Source: FNN
