Seoul: The government raised Wednesday the alert over a possible disruption in crude oil supply by a notch to Level 2 as geopolitical tensions in the Middle East persist. The alert was raised to the second lowest tier, or yellow, in South Korea's four-tier national resource security crisis warning system, as of 3 p.m., according to the Ministry of Trade, Industry and Resources.
According to Yonhap News Agency, the decision was made as escalating tensions among major oil producers in the Middle East, the effective closure of the Strait of Hormuz, and price hikes in global oil prices were expected to strain the supply of oil in South Korea. South Korea had issued the lowest alert of Level 1 earlier this month, about a week after the U.S. and Israel-led war in Iran broke out.
Under the Level 2 alert, the government will strengthen its supply and demand control measures for oil by exercising priority purchase rights to jointly held international petroleum reserves and securing alternative oil supplies that do not pass through the strait. Earlier in the day, Kang Hoon-sik, presidential chief of staff, said South Korea has secured a pledge from the United Arab Emirates to supply a total of 24 million barrels of crude oil.
Regarding the planned release of 22.46 million barrels of oil from Korea's strategic reserves under an agreement among International Energy Agency (IEA) members, the ministry said it is continuing consultations with the IEA to draw up a detailed release plan tailored to domestic conditions. On the demand side, the government is devising additional response strategies, such as mandatory energy-saving measures for the public sector and voluntary campaigns for the private sector.
The government introduced a temporary fuel price cap system for the first time since 1997 on Friday to help stabilize the energy market, while conducting an intensive crackdown on unfair market practices involving fuel prices. Earlier this week, President Lee Jae Myung also ordered relevant ministries to review additional energy-saving measures, such as car license plate restrictions every five or 10 days.
Meanwhile, the ministry said it is keeping the Level 1 national resource security crisis alert for natural gas, considering that Korea has sufficient supplies to last throughout this year and is continuing to secure additional supplies from regions other than the Middle East.