Government Launches Emergency Inspection of Crude Oil Supply Amid Renewed Middle East Tensions: "July-August Imports 100% Secured"

Emergency Meeting Held with Refinery and Shipping Industries

"Limited Short-Term Supply Impact... Securing Alternative Supplies in Parallel"

Moon Sunghak, Deputy Minister of the Ministry of Trade, Industry and Energy (left), is delivering remarks at the "Emergency Oil Supply Situation Review Meeting" held on the 13th in the Ministry's conference room at the Government Complex Sejong. Ministry of Trade, Industry and Energy.

As military conflict between the United States and Iran reignites and tensions surrounding the Strait of Hormuz escalate once again, the government has launched an inspection of the crude oil supply situation.

On July 13, the Ministry of Trade, Industry and Energy held an "Emergency Meeting on Crude Oil Supply and Demand Situation" at the Government Sejong Complex, attended by Korea National Oil Corporation, Korea Petroleum Association, representatives of the refinery industry, the Korea Shipowners’ Association, and others. The meeting reviewed trends in international oil prices and crude oil supply, the industry’s current status in securing crude oil, and tanker shipping conditions.

This meeting was convened in response to the recent deterioration of the Middle East situation, which had previously shown signs of stabilization after the signing of a ceasefire memorandum of understanding (MOU) between the United States and Iran last month. Iran declared the re-blockade of the Strait of Hormuz and attacked passing vessels, while the United States responded by launching airstrikes on Iranian military facilities. As a result, military clashes between the two sides have intensified once again.

The international oil market is also showing renewed volatility. Dubai crude oil prices fell to the 63-dollar-per-barrel range earlier this month, but as uncertainty over the ceasefire negotiations increased, they rose again to above 70 dollars per barrel. Brent crude and West Texas Intermediate (WTI) also showed upward trends during the same period. Domestic refiners, who settle crude oil purchases in U.S. dollars, are concerned that if both international oil prices and crude oil premiums rise and the won-dollar exchange rate climbs, the cost of importing crude oil will increase even further.

Expectations for passage through the Strait of Hormuz are also fading. As of July 12, two Korean vessels remain inside the Strait of Hormuz. Their departure, originally expected after mid-July, is now uncertain. Currently, there are 17 Korean crew members inside the strait, including seven aboard Korean-flagged vessels. After the U.S.-Iran ceasefire agreement, 24 of the 26 Korean vessels anchored in the Strait of Hormuz have exited the strait in sequence.

The government has determined that, even after the agreement, safety in the strait has not been sufficiently secured and has therefore advised domestic shipping companies to refrain from new entries. As a result, domestic shipping companies are continuing to transport crude oil via the detour through the Red Sea for the time being. To date, the 13th Korean tanker is transporting crude oil to Korea via the Red Sea route, and tankers that previously passed through the Red Sea have been sequentially docking at domestic ports to unload crude oil.

However, the government believes that, at present, the impact on domestic crude oil supply is not significant. The volume of crude oil secured by domestic refiners for July and August exceeds 100 percent compared to the previous year, so the risk of short-term supply disruptions is considered limited.

Industry sources also assess that the likelihood of immediate crude oil supply issues is low. An industry representative stated, "For now, both the volume of imports and reserves are sufficient, so the possibility of an immediate supply shock is not high. However, if supply chain risks are prolonged, increased volatility in international oil prices and heightened market uncertainty could drive up crude oil procurement costs."

The representative continued, "The blockade of the Strait of Hormuz has not been definitively confirmed, and this tense situation has been recurring since last February and March. The fact that international oil prices are not fluctuating as sharply as in the past, even amid remarks by U.S. President Donald Trump, shows that the market has developed a certain degree of learning effect."

In the event that a blockade of the strait does materialize, refiners are expected to enter emergency response mode. The source explained, "If the Strait of Hormuz is blocked, the domestic impact is likely to appear with a lag of about one to two months. From the moment a blockade is confirmed, refiners will flexibly adjust refinery operating rates and petroleum product output to devise operating strategies that can maximize their endurance."

Moon Sinn-hak, Deputy Minister of Trade, Industry and Energy, stated, "I ask that the government, oil refiners, and the shipping industry work closely together to thoroughly monitor crude oil supply trends so that there are no disruptions to people's daily lives. We will also strengthen the oil industry's structure by diversifying import sources to prepare for the possibility of ongoing Middle East instability, and build an energy security system that can withstand any crisis."

This content was produced with the assistance of AI translation services.