"Inevitable Surge in Global Oil Prices if Strait of Hormuz Is Blockaded... No Immediate Disruption to Tanker Operations"

Korea Petroleum Association: "Joint Response System with Government in Operation"

The Korea Petroleum Association stated that while it expects unavoidable complex shocks such as a sharp rise in oil prices following Iran's official decision to blockade the Strait of Hormuz, there will be no immediate disruption to tanker operations.

On June 23, the association released a statement saying, "Oil tankers in the Strait of Hormuz area are operating normally, and we are closely monitoring transportation conditions and international oil prices together with the government." The association added, "Iran's decision to blockade the strait is an unprecedented event. If an actual blockade is enforced, about 20% of the world's oil shipments could be affected," and predicted that "a sharp rise in international oil prices is inevitable."

According to the association, as of last year, 71.5% of South Korea's crude oil imports came from the Middle East. Of this, more than 95% was imported via the Strait of Hormuz. Major exporters such as Saudi Arabia, Kuwait, and the United Arab Emirates (UAE) all rely on this key maritime route.

An association official said, "So far, there has been no disruption to tanker operations, but if Iran's blockade is actually implemented, the situation could change completely. If the strait is closed, it will not end as a short-term issue but could expand into global instability in oil supply and demand."

The greatest concern for the refining industry is a surge in oil prices and the resulting reduction in refining margins. The association stated, "A short-term spike in oil prices due to geopolitical risks can shrink oil demand and negatively impact refining margins, which could become a burden on industry performance."

Currently, domestic refiners prioritize stability and economic efficiency when sourcing crude oil. However, the industry explains that with variables such as war and blockades shaking the foundations of the market, existing supply and demand strategies may no longer be effective.

The refining industry is currently operating a close response system together with the government. While monitoring international oil prices and transportation conditions in real time, the industry is making every effort to secure alternative crude types and supply routes in case it becomes difficult to import crude oil from the Middle East.

As of April, South Korea had a strategic petroleum reserve equivalent to about 207 days (approximately 7 months) of supply. The industry believes this would allow for a certain degree of response to short-term supply shocks. An industry official said, "The reserve is only a safety net for temporary supply disruptions; if the situation turns into a prolonged crisis, our ability to respond will also be limited," adding, "Intergovernmental resource diplomacy and global cooperation networks must also be pursued in parallel."

Although there has never been a case of a complete blockade of the Strait of Hormuz in practice, there are concerns that the impact could be significant this time, as it is an official decision by the Iranian parliament. The industry plans to closely monitor maritime transportation and international oil price fluctuations and to review additional response measures depending on how the situation develops.