Ministry of Industry: "Emergency Response Prepared for Worst-Case Scenarios Including Oil-Producing Countries' Escalation and Strait of Hormuz Blockade"

The government has decided to maintain an emergency response system until the situation ends in preparation for the prolonged Israel-Hamas armed conflict.

On the 2nd, the Ministry of Trade, Industry and Energy held a review meeting with related organizations and industries regarding the supply and demand of domestic oil and gas and domestic and international price trends.

Since the outbreak of the armed conflict, the Ministry of Trade, Industry and Energy has been closely cooperating with related organizations and industries to monitor the operation status of domestic oil tankers and liquefied natural gas (LNG) carriers, and is grasping the supply and demand status of oil and gas in real time.

At this meeting, the emergency response posture of each organization and industry was checked in preparation for various scenarios such as escalation to surrounding oil-producing countries due to the intensification of the conflict. The government is preparing for emergencies through sufficient gas stockpiles exceeding sustainable government and private reserves and legally mandated stockpiles for about eight months (according to the IEA). Various measures will be implemented according to the supply and demand crisis stage, including releasing stockpiled oil, encouraging diversification of import sources, and securing alternative routes.

International oil prices surged by about 4% immediately after the outbreak of the armed conflict (based on Brent crude), but have since fluctuated mostly in the high $80s per barrel range and have not reached the yearly high (September 27, $96.55 per barrel). Accordingly, domestic oil prices are also at the level of 1,700 KRW for gasoline and 1,600 KRW for diesel.

Yoo Beop-min, Director of the Resource Industry Policy Bureau at the Ministry of Trade, Industry and Energy, assessed, "Since Korea imports a large amount of oil and gas from the Middle East, there were concerns about supply and price in the early stages of the armed conflict, but so far there have been no disruptions." He added, "However, it is necessary to prepare for the worst-case scenarios such as escalation to oil-producing countries and blockade of the Strait of Hormuz, so the government, related organizations, and industries will maintain the emergency response system and cooperate closely until the situation ends."

[Image source=Yonhap News]

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