South Korea Raises Crude Oil Supply Disruption Alert Level by One Notch

The South Korean government raised the alert level for potential oil supply disruptions from Level 1 to Level 2 on Wednesday, due to ongoing geopolitical tensions in the Middle East.

According to the Ministry of Trade, Industry and Energy, as of 3 p.m., the national resource security crisis warning system (which has four levels) has been elevated to the second-lowest level, yellow.

This move comes amid escalating tensions among major oil-producing countries in the Middle East, the de facto closure of the Strait of Hormuz, and rising global oil prices, which are expected to lead to tight oil supplies in South Korea.

Earlier this month, about a week after the outbreak of conflict in Iran, South Korea issued the lowest-level alert, Level 1.

At Level 2, the South Korean government will strengthen supply and demand controls by exercising priority purchase rights to buy shared international oil reserves and securing alternative oil supplies that do not pass through the Strait of Hormuz.

Earlier that day, Chung Sye-kyun, Secretary-General of the President’s Office, stated that South Korea had secured a commitment from the UAE to supply a total of 24 million barrels of crude oil.

Regarding the plan to release 22.46 million barrels of oil from strategic reserves under an agreement among International Energy Agency (IEA) member countries, the Ministry of Energy said it is continuing consultations with the IEA to develop a detailed release plan that aligns with South Korea’s domestic situation.

On the demand side, the government is formulating additional response strategies, such as mandating energy-saving measures in the public sector and encouraging voluntary energy conservation activities in the private sector.

To stabilize the energy market, South Korea implemented a temporary fuel price cap for the first time since 1997 last Friday, along with increased efforts to crack down on unfair market practices related to fuel prices.

Earlier this week, President Yoon Suk-yeol also instructed relevant departments to review additional energy-saving measures every five to ten days, such as restricting the use of certain vehicle license plates.

Meanwhile, the Ministry of Trade, Industry and Energy stated that South Korea’s natural gas supply is sufficient to meet this year’s demand and that additional supplies are being secured from regions outside the Middle East, maintaining the natural gas national resource security crisis alert level at Level 1.