As rising crude feedstock costs threaten to flow through to fuel prices and inflation, Japan is stepping in to bear part of the strain faced by its oil refiners.

The government proposes to compensate refiners up to 5 yen ($0.04) per liter of gasoline produced. The move is expected to aid processors in maintaining profits while avoiding passing on growing prices to customers.

OPEC agrees to ease oil output cut to 7.7 mbpd in Aug.

Crude prices have risen as the roll-out of vaccines increased consumption, and the OPEC+ alliance has rejected requests to restore output more quickly. As a result, the cost of everything from diesel to gasoline has risen dramatically, fuelling inflation fears and raising alarm bells from the US to Japan.

Tokyo called on the Organization of Petroleum Exporting Countries and its allies to increase output more swiftly earlier this month, noting the improvement in demand and the energy crisis. OPEC+, on the other hand, has suggested that caution is still warranted.

Japan's measures will be included in an economic stimulus package that the government plans to finalise on Friday. The subsidy is expected to kick in if the average price of regular gasoline exceeds 170 yen per liter. Rates recently hit a seven-year high, hovering around 166 yen.