The ongoing crisis in the Hormuz Strait has not only led to rising global oil prices but has also exposed vulnerabilities in South Korea's energy supply chain, affecting the supply of crude oil, liquefied natural gas (LNG), liquefied petroleum gas (LPG), and naphtha. Analysts suggest that merely diversifying supply sources by increasing the number of importing countries is insufficient for crisis response. Instead, they emphasize the need to secure buffer assets and alternative supply options.
According to a report titled 'Limitations and Challenges of South Korea's Energy Supply Chain Revealed by the Hormuz Crisis,' published by the National Assembly Legislative Research Service on September 23, the current crisis has escalated beyond price increases to physical disruptions in the procurement of energy and industrial raw materials.
After the outbreak of conflict, the volume of crude oil and petroleum products passing through the Hormuz Strait plummeted from approximately 20 million barrels per day to nearly negligible levels. Supply disruptions from Qatar's LNG have prompted Asian importers, including South Korea and India, to seek alternative spot supplies, further impacting industrial production. The report indicates that disruptions have occurred not only in crude oil but also in naphtha, LNG, LPG, sulfur, helium, and maritime logistics, leading to a cascading effect on prices, volumes, and logistics.
The global energy supply chain is also undergoing a transformation. Following the shale revolution, the United States has emerged as a major producer and exporter of crude oil and LNG, establishing itself as a new supply axis capable of buffering shocks from the Middle East. In 2025, U.S. crude oil production is projected to reach approximately 13.6 million barrels per day, a record high, while LNG exports are expected to be among the largest globally. The Legislative Research Service assesses this development not as the emergence of a single supplier replacing the Middle East but as a diversification of the supply structure involving the U.S., Middle East, and Russia.
Conversely, energy demand is increasingly concentrated in Asia. China's share of global crude oil imports rose from about 11.5% in 2010 to 25.1% in 2024. By 2025, approximately 80% of crude oil and petroleum products passing through the Hormuz Strait and about 90% of LNG are expected to be directed toward Asia. Nearly all LPG exported from the Gulf region is supplied to Asian countries, including South Korea, Japan, China, and India.
South Korea's challenge lies not in the number of supplying countries but in the actual feasibility of transitioning to alternative sources. As of 2024, South Korea has 18 crude oil supplying countries, more than Japan, but the crude oil it imports passes through the same geopolitical chokepoints, and domestic refining facilities are tailored to specific crude types, making it difficult to quickly utilize alternative sources during a crisis. Over 90% of crude oil from the Middle East transits through the Hormuz Strait, which is also a vulnerability.
Particularly, naphtha, a key raw material for the petrochemical industry, is constantly exposed to risks from the Middle East. The naphtha yield in domestic refining processes is about 20%, with approximately 45% of domestic demand reliant on imports. In 2025, around 77% of naphtha imports are expected to come from the Middle East, with about 54% of total imports transiting through the Hormuz Strait. Disruptions in naphtha supply could ripple through manufacturing sectors such as plastics, packaging, automotive, and electronics.
Refining facilities also pose a barrier to transitioning. Domestic refiners have invested in advanced facilities to process heavy and high-sulfur crude from the Middle East, making a rapid shift to light and low-sulfur crude from the Americas challenging, as it could render residual oil processing facilities idle and alter product yield structures. While LNG import sources are more diversified than crude oil, a lack of liquefaction facilities, shipping capacity, and import terminal availability could hinder the acquisition of alternative supplies.
In light of these challenges, the Legislative Research Service recommends shifting energy security policy from merely diversifying supply sources to enhancing supply chain resilience. The key is to secure 'buffer assets' during normal times and 'transition options' during crises. This includes regularizing stockpiling and swaps, reducing dependence on specific regions and maritime chokepoints, and combining long-term contracts with resale rights, swap rights, and volume adjustment options.
Legislative measures proposed include enhancing the strategic raw material stockpiling system through a 'National Resource Security Special Act.' This would involve setting stockpiling targets for critical industrial raw materials, such as naphtha, which are currently excluded from mandatory stockpiling, based on risk assessments and alternative procurement possibilities. A phased system should be established to transition from minimum stockpiling during normal times to additional stockpiling during crises.
Revisions to the 'Tax Exemption Limitation Act' have also been suggested. This would involve including technologies and facilities that directly contribute to diversifying supply sources, such as processing non-Middle Eastern crude and transitioning raw materials, within the scope of new growth and core technologies eligible for preferential deduction rates. However, the Legislative Research Service emphasizes that support should be limited to investments that genuinely enhance the ability to transition between crude types and raw materials, rather than merely expanding or replacing aging facilities.
Choi Jeong-yoon, a legislative researcher, emphasized, 'The key to energy security lies not in uniformly eliminating individual rigidities but in managing exposure to risks and systematically securing essential buffer assets and transition options.'
* This article has been translated by AI.
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