South Korean President Lee Jae Myung said rising tensions around the Strait of Hormuz made it hard to be optimistic about the fallout from the Iran war, warning that high oil prices and supply-chain strains were likely to persist for some time.
Lee told a cabinet meeting on Tuesday the government should treat prolonged disruption in global energy and raw materials markets as a given and reinforce its emergency response system.
"For the time being, difficulties in global energy and raw materials supply chains and high oil prices will continue," Lee said.
"I ask that we pursue the development of alternative supply chains, medium- to long-term industrial restructuring, and the transition to a post-plastic economy as top-priority national strategic projects." Lee also urged ministries to move quickly to deploy a supplementary budget passed in response to the war.
At the meeting, ministers outlined steps to contain the economic shock from the conflict, including support for crude imports, controls against hoarding of petrochemical feedstocks and medical supplies, and expanded financial assistance for affected companies.
Industry Minister Kim Jung-kwan said disruptions to shipping through the Strait of Hormuz were still affecting supplies and that even if the passage normalises, it could take around 20 days for Middle Eastern cargoes to reach South Korea.
The government is prioritising support for the passage of seven South Korea-bound oil tankers stuck in the Gulf area, a document shown during the cabinet meeting said. Foreign Minister Cho Hyun told the meeting that the ministry had sent officials to the Congo, Algeria and Libya in a bid to secure energy supplies, in addition to presidential Chief of Staff Kang Hoon-sik travelling to countries such as Kazakhstan since last week.
"I also urge the parties to this war to take courageous steps toward the peace the world so desperately wants, based on the principles of protecting universal human rights and the lessons of history," Lee said. South Korea's energy ministry said on Tuesday it would begin rolling out a revised seasonal and time-of-use electricity pricing system to shift power demand away from evening peak hours toward midday, when solar generation is higher. The new rates take effect for large industrial users from April 16 while weekend discounts for electric-vehicle charging will begin on April 18. Meanwhile, Middle Eastern oil producers are in contact with South Korea about using the country's petroleum storage facilities as disruptions at the Strait of Hormuz continue, a South Korean industry ministry official said on Tuesday, signalling growing interest in offshore crude storage hubs.
Yang Ki-wook, a senior official at the industry ministry, told a briefing that Middle Eastern countries were showing increased interest in storing oil outside the strait because a prolonged disruption in logistics would hit their economies and pre-positioning crude could reduce export risks.
Yang said that in addition to Abu Dhabi National Oil Company (Adnoc), which already has a joint stockpiling agreement with South Korea, other Middle Eastern producers were also in contact, though he did not identify them.
