Seoul: The government announced plans on Tuesday to secure oil supplies from regions outside the Middle East following the de facto closure of the Strait of Hormuz. This development arises amidst ongoing U.S. and Israeli strikes on Iran, which have escalated tensions in the region, although South Korea reassured that it possesses adequate oil reserves to withstand such a crisis.
According to Yonhap News Agency, the Ministry of Economy and Finance convened an emergency response meeting with relevant ministries to evaluate the repercussions of the Iran conflict on South Korea and to formulate a strategic response. The ministry emphasized that no safety issues have been reported concerning Korean ships operating in the Middle East and affirmed the country's ample oil reserves in case the crisis extends.
The Strait of Hormuz, a vital oil export route, is crucial for South Korea, which imports approximately 70.7 percent of its oil and 20.4 percent of its liquefied natural gas from the Middle East. The government is preparing for a potential full blockade by securing additional oil supplies from other regions as a precautionary measure.
Vice Industry Minister Moon Shin-hak revealed that the government currently holds an oil reserve of 76.4 million barrels, with the private sector maintaining 73.8 million barrels. South Korea is capable of acquiring 35 million barrels within three months, ensuring a combined supply sufficient for 208 days.
Iran's Islamic Revolutionary Guard Corps declared the Strait of Hormuz closed on Monday, threatening to attack vessels attempting to traverse the waterway, as reported by Iran's state media. In response, South Korea's government pledged to monitor energy and financial markets continuously and is ready to deploy a market stabilization program worth at least 100 trillion won (US$68.4 billion) if necessary.
The Korea Composite Stock Price Index (KOSPI) plummeted over 7 percent on Tuesday due to heightened concerns over the crisis in Iran. Although international oil prices remain volatile, the ministry noted a deceleration in price increases.
The government vowed to tackle unfair market practices, including misinformation campaigns aimed at exploiting investor sentiment. First Vice Finance Minister Lee Hyoung-il stated that authorities will maintain round-the-clock surveillance of global financial markets and implement a market stabilization program valued at 100 trillion won if needed.
South Korea also plans to impose strict measures against efforts to incite investor panic through false information and price manipulation. Concurrently, Vice Budget Minister Lim Ki-keun instructed officials to meticulously oversee government budget execution related to export firms, shipping companies, and overseas Korean nationals to mitigate crisis-related damages.
Industry Minister Kim Jung-kwan held a meeting on the Middle East crisis, announcing preemptive support for around 1,000 export firms, primarily those shipping to the Middle East. The support package includes export vouchers and liquidity assistance. Kim also directed industry ministry officials to prepare for the swift release of oil reserves if supply conditions deteriorate and to explore alternative gas supplies outside the Middle East.
At present, the conflict's impact on Korea's energy supply, maritime logistics, and supply chains is minimal, according to Kim.