SEJONG — The South Korean government announced on Wednesday that it will significantly expand the scope of its Supply Chain Stabilization Fund to buffer the domestic economy against heightened volatility in global oil prices triggered by the ongoing crisis in the Middle East.

Kang Ki-ryong, Assistant Minister of the Ministry of Economy and Finance, convened a joint inter-agency meeting on March 4 to assess the impact of Middle Eastern tensions on domestic and international supply chains. The meeting focused on the import trends, substitution possibilities, and domestic production conditions of "economic security items" with high dependence on the Middle East, including energy, chemical products, materials, and equipment.

According to the ministry's assessment, there are currently no significant disruptions in domestic energy supply. South Korea currently holds a crude oil reserve sufficient for 208 days based on International Energy Agency (IEA) standards, providing a substantial cushion against short-term supply shocks.

However, as a preemptive measure against fluctuating oil prices, the government has decided to increase financial support for oil procurement and emergency operations through the Supply Chain Stabilization Fund.

A specialized "Supply Chain Fund Emergency Response Task Force" will be established within the Export-Import Bank of Korea (KEXIM). This team will facilitate higher credit limits for companies seeking to diversify their oil sources to regions such as North and Latin America, moving away from Middle Eastern reliance. Additionally, the government pledged rapid liquidity support for businesses suffering from temporary financial strain due to unstable international oil prices.

The ministry also stated that it is ready to activate emergency manuals, which include securing additional volumes from overseas, exercising priority purchase rights for joint stockpiles, and, if necessary, releasing national oil reserves.

While the impact on materials, parts, and equipment (MPE) remains limited due to the possibility of import diversification, the government expressed concern over Naphtha—a fundamental raw material for the petrochemical industry. Currently, 54% of South Korea's Naphtha imports pass through the Strait of Hormuz. Should the crisis persist, the government plans to implement measures such as diverting export volumes to domestic use to stabilize the market.

"We will spare no effort in supporting our companies to secure alternative supplies smoothly," said Assistant Minister Kang. "We are committed to taking preemptive actions to ensure that our domestic supply chain remains resilient and stable."

[ⓒ Global Economic Times. 무단전재-재배포 금지]