President Lee Jae Myung’s chief of staff will visit three countries to secure additional crude oil and naphtha supplies. Kang Hoon-sik will travel to Kazakhstan, Oman, and Saudi Arabia for this purpose. South Korea is bracing for a prolonged energy shock from the ongoing Middle East war. Kang announced the trip during a news conference on Tuesday morning. He spoke just hours before his departure from Seoul later that day.
Kang emphasized that securing alternative supply lines remains an urgent task. He stated that this urgency will persist until the Middle East situation is fully resolved. Our economy heavily depends on crude oil and naphtha imported from the Middle East region, Kang explained. As a result, there are some difficulties in supply and demand. As of last year, South Korea relied on the Strait of Hormuz for 61 percent of its crude oil imports. Iran has effectively blocked this strategic waterway. The country also depended on the same route for 54 percent of its naphtha imports.
Kang will visit the three countries as the president’s special envoy for strategic economic cooperation. Officials from relevant ministries will accompany him on this trip. The Ministry of Trade, Industry and Resources is sending representatives. Energy company executives will also join the delegation. Kang underscored the importance of this trip to the three nations. The government sees the current energy instability as having entered a prolonged phase.
Kang previously visited the UAE in mid-March as Lee’s special envoy. He secured an additional 18 million barrels of crude oil during that trip. South Korea has procured a total of 24 million barrels from the UAE under emergency arrangements. Six million barrels came through a hotline operation in early March. When I visited the UAE earlier, securing 24 million barrels was intended to quickly ease energy uncertainty, Kang recalled. He noted that even short-term relief was valuable at that time. This trip, by contrast, should be understood as an effort to prepare for longer-term supply stability. We believe the trip is necessary if it allows us to bring in even one more barrel of crude oil or secure even one more ton of naphtha.
Kang pledged to work closely with companies actually importing these supplies. He promised to spare no necessary support until crude oil tankers arrive at domestic ports. To ensure the government’s high-level consultations do not end as mere rhetoric, Kang stated, we will provide full support throughout the process.
Asked about purchasing US crude oil, presidential chief of staff for policy Kim Yong-beom gave an affirmative response. US President Donald Trump recently urged countries to buy oil from the United States. Trump said We have plenty during a news conference on April 1. However, questions have arisen about the feasibility of such purchases. South Korea’s refining infrastructure is highly optimized for processing heavy crude. Using lighter US crude directly would be less efficient economically and operationally. Kim explained that lighter crude from the US would go into government reserves.
The government would then supply an equivalent volume of heavier crude from state stockpiles in exchange. The US has abundant light crude, Kim stated. Whether from the US or elsewhere, if we import light crude, we can offer a swap. Most of our strategic reserves consist of heavy crude, so we are in a position to exchange it. We are currently operating a swap program.
Asked about a second supplementary budget, Kim downplayed the prospect. The National Assembly’s Special Committee on Budget and Accounts began reviewing a 26.2 trillion won supplementary budget bill on Tuesday. The government and ruling Democratic Party of Korea aim to secure its passage by Friday. A second supplementary budget is a very premature discussion, Kim stated. He called it a highly general proposition at this point.
For now, the goal is to swiftly deliberate on and execute the supplementary budget of around 26 trillion won. The government drafted the current extra budget on the assumption of about three months of direct shocks. It also assumes six months of indirect fallout from the Middle East war. Any further budgetary response should be considered only after the first supplementary budget is fully implemented.
