Korean Media: Minister of Industry: "Expand Imports of U.S. Crude Oil… Terminate the Maximum Price System as Early as Possible"

Minister of Industry: "Even after the war ends, we will continue advancing diversification of transportation routes"

Minister of Trade, Industry and Energy Kim Jung-gwan stated that South Korea should take advantage of the Middle East conflict to increase imports of U.S. crude oil, thereby achieving supply chain diversification. He also acknowledged that the artificially controlled maximum price system contradicts market principles and pledged to terminate it as soon as possible.

On the 19th, speaking with Yonhap News Agency, Kim said: "Even after the war ends, South Korea will not stop efforts to expand imports of non-Middle Eastern crude oil and diversify transportation routes." Last year, 61% of South Korea’s crude oil and 54% of its naphtha were transported through the Strait of Hormuz, creating a structural vulnerability such that any similar disruption like the current Middle East conflict could severely shake the entire economy. Kim emphasized: "What is needed now is 'just-in-case' preparedness—diversifying supply sources and securing reserves—not merely 'just-in-time' importation that relies on immediate availability."

Kim noted: "U.S. light crude oil is the most convenient type for South Korean refiners to blend with medium-grade crude from the Middle East." He mentioned the possibility of increasing imports of U.S. crude among non-Middle Eastern sources. Some in the energy sector analyze that while reducing dependence on Middle Eastern crude, the South Korean government may also use increased U.S. crude imports as a strategic tool to strengthen its negotiating position in trade talks with the United States.

Kim assessed that psychological factors play a significant role in the recent industry concerns about instability in naphtha supply and demand. He explained that minor fluctuations upstream in the supply chain tend to amplify as they propagate downward, triggering a "ripple effect." He predicted: "Once we safely get through April, stability will gradually spread."

Kim admitted that the "maximum crude oil price system"—the first direct government intervention in market pricing since South Korea's oil liberalization in 1997, after 29 years—is inconsistent with market economy principles. He said: "This was a temporary measure taken to address abnormal wartime conditions. The correct approach is to terminate this system as early as possible once the situation stabilizes."

Kim added that projects agreed upon under the Korea-U.S. tariff agreement are progressing smoothly. The South Korean government plans to formally establish the "Korea-U.S. Strategic Investment Corporation" in June to manage investments amounting to $3.5 billion. Kim said: "The establishment of this corporation will serve as strong proof of South Korea’s commitment to fulfilling its promises through concrete actions."

Source: Chosun Ilbo

Original article: toutiao.com/article/1862962758157324/

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