South Korea Relies on Two-Month Strategic Reserve, Urgent Industry Review Underway

The People Power Party and Democratic Party separately held emergency meetings with oil refining and petrochemical industry officials on the 19th to discuss countermeasures for energy supply disruptions caused by the Middle East crisis. Concerns over a so-called 'Fourth Oil Shock' are becoming reality as naphtha prices have doubled and Dubai crude oil has surpassed $120 per barrel due to Iran's blockade of the Strait of Hormuz.

The People Power Party held a meeting at the National Assembly with floor leader Song Eon-seok and other leadership members, joined by representatives from the four major oil refiners—SK Energy, GS Caltex, HD Hyundai Oilbank, and S-OIL—as well as the Korea Petroleum Association. The Democratic Party's Euljiro Committee also conducted meetings with petrochemical companies including LG Chem, Hanwha Solutions, and Lotte Chemical, listening to on-site concerns about naphtha supply shortages and production shutdowns.

Industry Requests: From Strategic Reserve Release to Tax Deferrals

During the meeting, the oil refining industry requested ▲sharing of strategic reserve release volumes and timing ▲expanded freight support for import source diversification ▲deferral of oil tax and tariff payments ▲exemption from individual consumption tax on heavy oil used as raw materials. Floor leader Song Eon-seok pointed out that "currently, South Korea's public and private strategic oil reserves amount to only about two months' worth of normal usage," adding that "the additional volume secured by the government from the UAE is also equivalent to only about ten days of usage."

The petrochemical industry conveyed concerns from small and medium-sized enterprises that price increases for products made from crude oil imported at previous normal prices are unjustified. Representative Kim Nam-geun of the Democratic Party's Euljiro Committee stated, "We will separately pursue meetings with large corporations going forward."

Ruling and Opposition Parties to Push for Financial and Tax Support Measures

Financial Services Commission Chairman Lee Eok-won promised at a party-government consultation with the Democratic Party that "we will prepare programs to reduce the burden on affected businesses, small business owners, and ordinary citizens due to the Middle East situation and expand financial support, making efforts to reflect these in the supplementary budget." People Power Party Representative Park Soo-young expressed a commitment to swift support, saying "we will make efforts to address tax-related matters at the Finance Committee as early as next week."

Meanwhile, Representative Park noted that "26 of our vessels and 183 crew members are stranded due to Iran's blockade of the Strait of Hormuz," arguing that "the government should proactively declare our military's participation in escorting ships through the Strait of Hormuz." Floor leader Song Eon-seok emphasized that "if the situation does not stabilize within March, there is a high risk of actual supply disruptions," adding that "a sober assessment of the situation and countermeasures considering even the worst-case scenario are required."