Seoul: South Korea is taking a cautious approach with the timing of its oil stockpile release under the agreement among International Energy Agency (IEA) members amid concerns there could be a global oil crisis in August, an industry ministry official said Tuesday.
Earlier this year, Seoul pledged to release 22.46 million barrels of oil from its strategic reserves by June 9 under a joint plan adopted by 32 member nations of the IEA as part of efforts to help address disruptions in oil markets sparked by the US-Israeli war against Iran in late February.
But Yang Ghi-wuk, deputy minister for trade, industry and resources security, told reporters in a regular press briefing that the Seoul government is trying to cautiously determine the timing of the release, as the option should be used as a “final” card for the worst situation, Yonhap news agency reported.
“Concerns over (a possible oil crisis) have somewhat eased recently with news that the situation in the Middle East may get better, but until just a few days ago, there have been projections that oil supplies may suffer disruptions if the effective closure of the Strait of Hormuz continues for longer,” he said.
IEA Executive Director Fatih Birol warned last week that commercial oil inventories are depleting at a “very fast” pace, noting that oil markets could enter a “red zone” in July or August.
Yang said the government does not feel much need for an oil release at the moment, thanks to the country’s efforts to secure alternative supplies and the crude swap system with private firms.
“We are trying to adhere to the IEA’s plan as much as possible, but it is not an obligation or something we could get penalised for,” he explained, adding that the timing and the way of the release can differ by country.
The industry ministry has said South Korea’s crude oil supplies are relatively stable for now, with about 85 per cent of pre-Iran war supplies having been secured for use throughout July.
Meanwhile, the combined share of South Korea’s oil supplies tentatively secured from regions other than the Middle East for use in the May-July period reached 51.5 per cent, sharply up from the 30.9 per cent tallied last year, according to the ministry.
The share of shipments from North and South America increased to 35.6 per cent from 23.1 per cent over the same period, with shipments from Asia rising to 7.4 per cent from 5 per cent. Shipments from Africa expanded to 8.3 per cent from 2.2 per cent, the latest findings showed.
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