Vice Minister Ki Jae: "Iran Situation Has Limited Short-Term Impact on Oil Supply" (Comprehensive)

Korea, a Country with Large Reserves... "No Disruption to Daily Life"

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] The government stated that there will be no disruption to short-term crude oil supply and demand amid the Iran situation, but plans to secure alternative sources in case of a supply crisis.

Kim Yong-beom, First Vice Minister of the Ministry of Economy and Finance, held an expanded macroeconomic and financial meeting at the Government Seoul Office on the 7th, saying, "There have been no disruptions yet in the shipment volume and schedule of Middle Eastern crude oil, so the short-term impact on crude oil supply and demand will not be significant," and emphasized, "It is necessary to prepare for increased uncertainty in international oil prices due to the prolonged conflict and potential escalation between the United States and Iran."

Vice Minister Kim said, "Although volatility in international financial markets and oil prices may increase depending on developments in the Middle East, there is no need to have excessive anxiety," adding, "Korea's solid external soundness acts as a safety net controlling financial market volatility."

He continued, "If market volatility expands, we will respond swiftly and decisively according to the contingency plan," and stated, "Since the possibility of prolonged political instability in the Middle East cannot be ruled out, we will closely monitor domestic and international oil and gas supply and demand situations and oil price trends, and respond promptly to minimize the impact on related domestic markets."

The government also presented countermeasures in case the Iran situation prolongs. In the event of an oil supply crisis, it plans to quickly secure additional volumes by securing alternative sources. If resolving the crisis proves difficult, emergency response measures such as releasing reserve oil will also be considered. As of the end of November last year, Korea has about 200 million barrels of reserves, including both government and private sectors. This amount is arithmetically sufficient for about six months of use. Vice Minister Kim said, "Korea is a country with large reserves," and added, "There is no need to worry about disruptions to daily life."

Regarding the recent rise in international oil prices, he explained, "It remains to be seen whether this incident will be a major variable," and said, "The Middle East's share has significantly decreased compared to 10 years ago, and other regions' shale and alternative production facilities are sufficient, so price fluctuations due to supply instability itself are not large."

However, experts foresee a high possibility that the conflict between the United States and Iran will escalate into an emotional confrontation and prolong.

Seo Sang-young, a researcher at Kiwoom Securities, stated, "This Iran situation has disrupted the improving global economic trend." He also said, "If it leads to a full-scale war, international oil prices could rise to as much as $100 per barrel, and the financial crisis would worsen," adding, "For Korea, which is highly dependent on exports, the economic slowdown will accelerate."

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