Seoul: The government has extended its crude oil swap system with private firms until the end of June due to ongoing uncertainties surrounding the Strait of Hormuz, a vital oil shipping route, as announced by the industry ministry on Tuesday. This extension aims to stabilize domestic fuel supplies amidst the U.S.-Israeli conflict with Iran that has impacted oil distribution.

According to Yonhap News Agency, the oil swap system, introduced in April, allows the government to lend crude stockpiles, primarily Middle Eastern crude, to refiners. These refiners are obliged to replenish the stock once alternative supplies are secured. Initially set for a two-month duration ending in May, the system has facilitated the exchange of 21 million barrels of oil between the government and private firms, as reported by the Ministry of Trade, Industry and Resources.

The ministry indicated that South Korea has secured approximately 85 percent of its pre-Iran war oil supplies for July, with expectations of no significant disruptions in August. Industry Minister Kim Jung-kwan assured during a Cabinet meeting that oil supplies for August are increasing, alleviating concerns of a potential summer oil crisis.

Last month, Fatih Birol, Executive Director of the International Energy Agency, cautioned that commercial oil inventories are depleting rapidly, suggesting that oil markets might face critical shortages in July or August.