South Korea braces for oil supply disruption

South Korea is mulling over plans to release its strategic oil reserves in case of a disruption in supply, a senior finance official said on Tuesday.

The move follows attacks on oil processing facilities in Saudi Arabia — Seoul’s top oil supplier.

“The strikes on major oil facilities in Saudi Arabia have intensified concerns about growing instability of international oil prices,” Kim Yong-beom, vice minister of economy and finance, said in a meeting with key economy and finance officials in central Seoul. “The government is vigilant about potential risks that could affect national economy and will brace for any risk.”

The vice minister anticipated, however, that the Saudi supply disruption would not have an impact on the South Korean oil supply in the short-term.

That’s because the country imports oil from Saudi Arabia under long-term contracts, and the Kingdom has vowed to prevent problems in its supply of crude oil through its reserve oils, he said. “We’re closely watching the situation and preparing for alternatives in case the risks in the Middle East are prolonged and intensify,” Kim said.

To that end, the government could release strategic oil reserves in an effort to stabilize supply and demand, he added.

As of 2018, the combined oil reserves held by the South Korean government and local refiners came to 200 million barrels.

“We will also seek alternative suppliers in cooperation with local oil refiners if necessary,” he said. Last year, South Korea imported 323 million barrels of crude from Saudi Arabia. The figure accounts for nearly 30 percent of its total oil imports, according to the Korea Petroleum Association.

The oil refinery industry is on high alert over potential fallout from the drone attacks on Saudi oil processing installations.