Seoul: The government plans to lower the resource security crisis warning for crude oil by a notch to Level 2, the industry ministry said Tuesday, following the stabilization of global oil prices amid progress in peace talks between the United States and Iran.
According to Yonhap News Agency, the Ministry of Trade, Industry and Resources announced that the adjustment will take effect on Wednesday, adding that the alert for natural gas will be fully lifted as well. South Korea operates a four-tier national resource security crisis warning system based on the severity of supply disruptions and their impact on the national economy. The government initially issued the lowest alert for crude oil in early March, which was raised to Level 2 later that month and eventually to Level 3 in April. A Level 2 alert for natural gas has also been maintained since April.
Following the adjustment, the ministry plans to gradually lift emergency supply measures, such as the crude oil swap system with private firms, under which the government offers crude from its reserves to refiners with an agreement that they will later replenish the volume once supplies are secured. Other supportive measures to be lifted include the government's subsidies covering additional shipping costs incurred when importing crude oil from regions outside the Middle East. These measures are set to expire as scheduled on Tuesday.
Despite these changes, the government will maintain its ban on hoarding raw materials for petrochemical products beyond July. The ministry noted that more crude oil is being imported via routes bypassing the Strait of Hormuz, with South Korea also securing imports from regions beyond the Middle East, including the U.S. Shipments through the strait have partially resumed, with six of the seven oil tankers bound for South Korea that had been stranded in the strait resuming their voyages.
"However, uncertainties regarding passage through the strait have not yet been fully alleviated, and we cannot rule out the possibility of future supply disruptions due to previous attacks on crude oil production and transportation facilities," the ministry stated. Consequently, the government will also fully lift the vehicle rotation system, scrapping its original plan to ease the odd-even rule to a five-day rotation.
"The government will refrain from taking an excessively negative or positive stance until the situation is fully normalized and the resource security alerts are completely lifted," Industry Minister Kim Jung-kwan said in a release. Kim added that South Korea will implement policies to enhance the country's resource security by diversifying sources and increasing reserve capacity to fundamentally improve its supply chain, even after the war is completely over.