Possible Strait of Hormuz blockade puts Korea on energy security alert

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Possible Strait of Hormuz blockade puts Korea on energy security alert

Published: 23 Jun. 2025, 19:05

SARAH CHEA
[email protected]

Audio report: written by reporters, read by AI

A driver fills up on fuel at a gas station in Seoul on June 23. [YONHAP]

Escalating fears of a potential Iranian blockade of the Strait of Hormuz are casting a shadow over Korea’s energy security, since the vital maritime chokepoint serves as the transit route for some 70 percent of the country’s crude oil imports from the Middle East.

With worst-case scenarios projecting oil prices soaring to $130 per barrel, the Korean government and companies convened urgent high-level meetings to devise strategic countermeasures to the predicted fallout of disrupted oil supplies, which could also weaken consumer sentiment, amplify financial market volatility and trigger a broader economic slowdown.

Iran's parliament on Sunday voted to close the Strait of Hormuz, the critical shipping channel that around 20 percent of the world's daily oil passes through, in retaliation against the United States’ bombing of its key nuclear facilities at Fordow, Natanz and Isfahan. It still needs a final approval by Iran’s Supreme National Security Council and Supreme Leader Ayatollah Ali Khamenei, but the possibility of a blockade has been surging as hard-line factions within Iran push for a tough reaction to the U.S. attacks.

As an energy-dependent nation, an estimated 67 percent of Korea’s crude oil imports currently transit the Strait of Hormuz. Approximately 70 percent of Korea’s oil supply is sourced from the Middle East, where critical production infrastructure is heavily concentrated around the Persian Gulf. Nearly 99 percent of Middle Eastern crude destined for Korea passes through the pivotal maritime chokepoint.

Despite being only about 90 miles long and 21 miles wide at its narrowest point, the Strait of Hormuz possesses critical geopolitical importance as the exclusive maritime corridor linking the Persian Gulf to the Indian Ocean.

It has never experienced a complete blockade, but it has faced multiple disruptions over the decades, including the Iran-Iraq War in the 1980s, tensions between Iranian and U.S. naval forces in 2007, and Iran’s seizure of the Advantage Sweet, a crude tanker chartered by Chevron in 2023.

JP Morgan has earlier projected that crude prices could surge to some $120 to $130 per barrel in the event of closure of the Strait of Hormuz, calling it the “worst outcome.” Goldman Sachs analysts also predicted that the potential closure will push the oil prices above $110 per barrel.

West Texas Intermediate (WTI) crude was trading at $73.84 per barrel as of 3 p.m. as of Monday after hitting an intraday high of $78.40, the highest in five months. Prices have surged 13 percent since Israel launched airstrikes on Iran on June 13.

Brent crude also climbed as high as $81.40 during intraday trading before settling around $76 as of 3 p.m.

A view of Korea National Oil Corporation’s crude oil storage facility in Seosan, South Chungcheong. [KOREA NATIONAL OIL CORPORATION]

Domestic fuel prices have been trending upward regardless of recent geopolitical risks, which signals a further increase given the typical two-week lag between global crude price fluctuations and retail prices. The average nationwide gasoline price at domestic gas stations rose to 1,635.5 won ($1.2) per liter between June 15 and 19, a 7.8 won up from the previous week, for the first uptick in six weeks.

“Only Saudi Arabia and the United Arab Emirates own limited pipeline infrastructure that can bypass the Strait of Hormuz, but these alternative routes are capable of handling only about 13 percent of the total volumes,” said economist Chun Kyu-yeon from Hana Securities.

“In the event of a full blockade, Saudi Arabia and Asian markets are expected to bear the brunt of the impact, as approximately 84 percent of the oil passing through the strait is destined for Asia. The United States would face minimal disruption, as only 7 percent of its total oil imports transit the strait, and its reliance on Middle Eastern crude has been steadily declining.”

The Korean Ministry of Economy and Finance on Monday held an emergency meeting with eight critical agencies, including the Foreign Affairs Ministry, the Trade Ministry, the Oceans and Fisheries Ministry and ordered them to remain alert and closely monitor supply conditions, citing heightened volatility in global energy prices.

Korea National Oil Corporation President Kim Dong-sub also held an urgent meeting on oil supply security to review contingency plans in response to potential supply disruptions stemming from rising tensions in the Middle East, including the possibility of a Strait of Hormuz blockade.

“Korea currently holds a total of 206.9 days’ worth of oil reserves, well above the 90-day minimum recommended by the International Energy Agency, across both government and private sectors,” said a spokesperson for Korea National Oil Corporation. “Of them, Korea National Oil Corporation manages 116.5 days’ worth of reserves at nine storage facilities across the country.”

BY SARAH CHEA [[email protected]]