Korea considers releasing oil reserves in case of supply disruption
This satellite overview handout image obtained Sept. 16, 2019, shows damage to oil/gas infrastructure from weekend drone attacks at Abqaig on Sept. 14 2019 in Saudi Arabia. Drone attacks on key Saudi oil facilities have halved crude output from OPEC's biggest exporter, catapulting oil prices by the largest amount since the first Gulf War. The crisis has focused minds on unrest in the crude-rich Middle East, with Tehran denying Washington's charge that it was responsible. AFP
South Korea will consider releasing its strategic oil reserves in case supply is disrupted following drone strikes on Saudi Arabia's crude processing facilities, a senior official said Tuesday.
The combined oil reserves held by the South Korean government and local refiners came to 200 million barrels as of 2018.
"The government will swiftly push for measures to stabilize supply and demand ... in case oil supply is disrupted," Kim Yong-beom, vice minister of economy and finance, said in a meeting with relevant officials in central Seoul.
Saudi Arabia shut down about half of its oil production Saturday following a series of drone attacks that damaged two key oil installations. A Yemeni rebel group has claimed responsibility for the attacks. The Saudis said that the closure will affect 5.7 million barrels of crude production a day, about 5 percent of the world's daily oil production.
Kim said South Korea will secure alternative sources of oil imports in close consultation with local refiners, if necessary.
The attack, however, is unlikely to cause any major disruption in South Korea's import of oil from the kingdom, and is likely to have a limited impact on the South Korean economy.
Saudi Arabia has been South Korea's top oil supplier. Last year, South Korea imported 323 million barrels of crude from Saudi Arabia, accounting for nearly 30 percent of its total oil imports, according to data from the Korea Petroleum Association.
Kim said the government will closely monitor oil prices as there is a possibility that the situation could persist due to instability in the Middle East.
South Korean refiners have been importing Saudi crude oil under long-term contracts, and Saudi Arabia has vowed to prevent problems in its supply of crude oil through its reserve oils.
S-Oil Corp., which gets most of its crude from No. 1 shareholder Saudi Aramco, said supply disruption is unlikely since oil reserves from Saudi's top oil firm are stored in other countries, such as the Netherlands and Japan. (Yonhap)