Korean Media: South Korea Wins 'Korea-Japan Oil Battle'

According to a report by JoongAng Ilbo on October 20, amid oil supply shortages triggered by conflicts in the Middle East, South Korea and Japan adopted divergent strategies. While Saudi crude exports declined by over 30% between April and July this year, South Korea’s actual imports increased, whereas Japan failed to reverse its downward trend. This outcome reflects the effective implementation of strategies by South Korean oil companies, including securing alternative transportation networks and diversifying import sources.

On the 19th, data analysis from South Korea’s state-owned oil company and Japan’s Ministry of Economy, Trade and Industry revealed that South Korea imported 30.71 million barrels of crude oil from Saudi Arabia in July—up 7.6% compared to the same period last year. In contrast, Japan’s imports from Saudi Arabia fell by 6.6%. During the same period, total Saudi crude exports declined by 31.2%, highlighting a stark divergence in procurement trends between the two nations.

During the peak of the supply crisis in April and May, the gap between the two widened further. In April, Saudi exports dropped by 35.3%, while Japan’s imports from Saudi Arabia plummeted by 57.7%. Meanwhile, South Korea’s decline in imports stood at just 34.4%.

In May, Saudi exports fell sharply by 44.5%, with Japan’s imports dropping by 58.0%, while South Korea’s imports declined by only 27.9%, demonstrating relatively stronger performance.

Looking at cumulative figures from April to July, Japan’s imports declined by 41.2%, while South Korea’s fell by 21.0%—approximately half of Japan’s rate. South Korea had lagged behind Japan in crude purchases in May last year, but this year it rose to about 1.5 times Japan’s level.

The relative stability in South Korea’s crude procurement stems from concerted efforts by government and industry to secure supply chains. In April, the South Korean government dispatched a special envoy for strategic economic cooperation to Saudi Arabia, securing a commitment for priority allocation of 200 million barrels of crude to South Korean enterprises from June through year-end.

Between April and May, 50 million barrels of crude were transported via Yanbu port along the Red Sea coast, bypassing the Strait of Hormuz—timing remains unspecified. Additional transit routes through Fujairah Port in the UAE were also expanded. In the first half of this year, South Korea’s imports of crude from the UAE reached 70.52 million barrels, a 17% increase from the same period last year.

Divergent approaches to reserve management also contributed to the disparity. Japan released approximately 90 million barrels of government-held crude reserves twice—in March and May—while South Korea suspended direct releases and instead implemented an “exchange” system: oil is loaned to refineries and later repaid through new imports. This mechanism aims to bridge supply-demand gaps caused by time lags, particularly given the delay in vessel arrivals even when alternatives are secured. According to statistics from the Ministry of Trade, Industry and Energy, around 26 million barrels were supplied through this exchange system between March and June this year.

In May, global energy information and analytics firm S&P Global Energy highlighted South Korea’s crude exchange system, noting that collaboration between government and the refining sector has helped stabilize procurement of Middle Eastern crude.

Last month, an analysis pointed out that major Asian countries have restructured their crude procurement strategies by bypassing the Strait of Hormuz and diversifying sources, observing that “these changes are most evident in South Korea.”

With crude imports rebounding, domestic petroleum product supplies in South Korea have remained relatively stable. According to the Ministry of Trade, Industry and Energy, crude imports in October and November held steady at 100% of last year’s monthly average. Despite global diesel shortages, South Korea has maintained consistent shipments of refined products to countries such as the United States, Australia, and New Zealand.

However, given ongoing instability in the Middle East, efforts to secure crude supplies continue. On the 12th, Minister of Trade, Industry and Energy Kim Jung-gwan disclosed via social media that despite a Level 3 travel alert across Saudi Arabia, a delegation—including Lee Gi-wook, Director of the Department of Industrial Resource Security—proceeded to Saudi Arabia. The meeting aimed to engage senior officials from the Saudi Ministry of Energy and state-owned oil company Aramco to strengthen cooperation on oil supply. Minister Kim stated, “The era in which resources could be secured merely through price agreements has ended,” underscoring the importance of collaboration between government and industry.

To ensure that diversified crude imports are not merely temporary measures, the South Korean government plans to expand subsidies for freight differentials related to non-Middle Eastern crude imports and support the development of various refining facilities.

Original: toutiao.com/article/1879530516359180/

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