Korean Government Scrambles to Secure Crude Amid Middle East Conflict

The South Korean government has summoned the country's four refiners to draw up emergency measures in response to the Middle East conflict spreading beyond the Strait of Hormuz into the Red Sea. The Ministry of Trade, Industry and Energy held an emergency meeting on crude supply conditions at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul, chaired by Vice Minister Moon Shin-hak.

Executives from SK Energy, GS Caltex, S-Oil, and HD Hyundai Oilbank attended along with Korea National Oil Corp. A government official said that while crude imports for September and October have already been secured at more than 90% of year-earlier volumes, limiting the immediate impact on domestic supply, the government will mobilize every available policy tool to address the crisis.

The conflict has disrupted international crude and refined product prices, with Dubai crude jumping from $80.8 a barrel on August 7 to $123.7 on September 11. The international price of gasoline traded in Singapore rose to $147.9 a barrel on the 11th, up 26.8% from a month earlier.

The government is reviewing plans to expand subsidies covering freight cost differences so refiners can import more crude from outside the Middle East, and developing an 'oil supply and demand stabilization diagnostic index' that combines factors affecting crude supply. The aim is to ensure contracted crude cargoes arrive on schedule and to gauge the security of the oil supply chain.