Japan, South Korea join US in SPR release: Update

Adds China comment in paragraphs 1 & 7; updates Ice Brent price in paragraph 10

Japan and South Korea are joining the US and other oil-consuming nations in releasing crude from strategic reserves, as part of a global effort to reduce fuel prices that have hit a seven-year high. China was non-committal, saying it will release crude "in light of its own needs".

Retail regular grade gasoline prices reached a seven-year high of $3.41/USG earlier this month in the US, prompting President Joe Biden to order the US to draw down up to 50mn bl of crude from its Strategic Petroleum Reserve (SPR) as part of a co-ordinated release with China, India, South Korea, Japan and the UK.

The Japanese government today said it will release several million barrels of crude from its strategic reserves, a move that brings forward scheduled sales and that is not aimed at lowering oil prices, the trade and industry ministry (Meti) said. Details such as the exact volume and timing are unclear. Japan last issued a tender to sell crude from its strategic oil reserves in May.

Japan's stockpiling law does not allow sales from the strategic reserve to lower oil prices. The move to bring forward the sales schedule takes into account current crude prices and US co-ordination efforts to prevent a surge in oil prices from negatively affecting the global economic recovery, Meti said.

South Korea today confirmed its participation but did not provide details. The scale, timing and method of release will be specified later, and it is expected to be at a level similar to that of previous IEA-led international co-operation cases, the trade, industry and energy ministry said.

"At the time of the Libyan crisis in 2011, about 4pc of the oil reserves, or 3.467mn bl, were released," it said.

China said it will "make arrangements" to release crude and "adopt other necessary measures to keep the market steady in light of its own realities and needs", and said it will release further "relevant information on a timely basis."

US bank Goldman Sachs estimates crude reserve releases from South Korea, Japan, China, India and the UK to total as much as 30mn bl.

India has agreed to release 5mn bl of crude from its strategic stocks at an unspecified time, while the UK has authorised companies to voluntarily release the equivalent of up to 1.5mn bl of oil held in reserves.

Futures prices rose yesterday after the US announcement, but today Ice front-month January Brent contract was broadly unchanged at $82.29/bl as of 15:42 GMT.

"The SPR releases are less than expected… and the US is releasing crude, not gasoline, which is the main problem here," a Singapore-based trader told Argus.

The global oil release comes ahead of an Opec+ group meeting on 2 December, where it will discuss whether to stick with long-term plans to raise production.

By Reena Nathan and Maiko Nakashima