Japan has recently raised concerns about the high probability of a surge in oil prices. If this scenario comes true, prices are likely to remain high in the long term.
Japan's new chief cabinet secretary Hirokazu Matsuno believes that oil prices could be hovering at their peaks for some time. He expressed concerns following the decision of OPEC+ to keep oil output unchanged. This move may lead to a significant drop in oil supplies.
At the last meeting, the alliance agreed to maintain oil production at the current levels. Therefore, the cartel will continue to cut oil output by 2 million barrels per day.
OPEC+ explained that the decision was driven by the "uncertainty that surrounds the global economic and oil market outlook." It also mentioned the likelihood of a further drop in oil demand. Notably, at the end of October 2022, Haysam al-Gais, the Secretary General of the alliance, said that in the fourth quarter of 2022 and in early 2023, there might be a supply surplus in the oil market. For this reason, output cuts are needed to prevent such a scenario.
"The government is watching oil prices," Hirokazu Matsuno pointed out. The Japanese government also takes into consideration the impact of global events on the domestic economy. Japan reckons that it is crucial to build "constructive and stable" relations with oil-producing countries such as Saudi Arabia, the UAE, as well as Russia. The Japanese authorities are making an effort to ensure stability in the global oil market through increased output and investment in industrial facilities, Matsuno stressed.
