• Japan’s return to nuclear powers uranium stocks
  • Nuclear a real option for the Land of the Rising Sun
  • US oil inventory drop fails to galvanise crude prices

Uranium stocks on the ASX soared yesterday on news that Japan will not just restart its mothballed nuclear power plants, it will also look into building new plants to diversify its energy sources.

This was prompted by the Ukraine war and soaring energy costs with Japanese Prime Minister Fumio Kushida adding that nuclear power could also be needed to meet the country’s goal of becoming carbon neutral by 2050.

The idea that nuclear power is essential to meeting net zero objectives is not new given that the US has also made it clear that energy from splitting uranium atoms is key to its goal of achieving 100% clean energy by 2035.

Closer to home, Opposition Leader Peter Dutton has voiced his support for nuclear energy, saying it is a serious option for reducing emissions – a stance that has been ridiculed by Prime Minister Anthony Albanese.

Just how viable is nuclear power?

Nuclear power certainly can be viable despite what the environmental lobby might say, but it obviously needs to be handled carefully and there has to be the political will to drive it forward despite the high costs and long timeframes involved.

Newer designs also promise to be a lot more flexible due to their modular nature while being safer to boot.

It certainly makes sense for Japan, which imports the vast majority of the energy it needs and for which nuclear energy means it is not entirely reliant on coal, gas or oil – especially if they will be cut off in the coming decades.

Regardless of its reasons though, the news is music to the years of uranium companies and while Australia itself is every bit as resistant to the idea of nuclear power as it has ever been, Australian companies will be more than happy to supply uranium – even uranium mined in Australia – to Japanese utilities.

Expect to see project restarts or new projects getting off the ground as the demand from Japan drives prices of U3O8 up over time – likely beyond the point which makes marginal supply viable.

Oil inventories fail to drive prices

Meanwhile, crude oil prices barely budged despite the US Energy Information Administration reporting a 3.3 million barrel decline in crude oil inventories for the week to August 19.

The benchmark Brent crude had soared past the US$100 per barrel mark earlier this week after OPEC+ warned that it might cut production if Iranian oil re-entered the market.

There’s certainly enough concern on the demand side that some analysts are forecasting higher oil prices in 2023 – a likelihood that is supported by the European Union’s coming embargo on Russian seaborne oil imports.

But not everything is going the way of the oil bulls and further signs of a recession in the major economies could certainly put the kibosh on further crude price gains if not outright reversals.