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Why Korea keeps relying on oil from the Middle East

Published: 26 Jun. 2025, 10:57

S-Oil's Ulsan plant [S-OIL]

Every time geopolitical tensions push up oil prices — like the recent Israel-Iran war — talk of diversifying Korea’s crude oil imports resurfaces. But despite decades of warnings, the country’s reliance on the Middle East remains deeply entrenched, driven by more than just a desire to maintain business as usual.

As of May, oil from the Middle East accounted for 62 percent of Korea’s crude oil imports — or 59.23 million barrels out of a total 95.54 million barrels — according to data released Wednesday by the Korea National Oil Corporation.

North and South America followed with 25.3 percent, Asia with 8.0 percent, Africa with 4.1 percent and Europe with 0.6 percent. Barring exceptional periods like the Covid-19 pandemic, the share of Middle Eastern oil has consistently ranged between 60 and 80 percent since the 1970s.

Refiners say sourcing alternatives is far more complicated than it sounds, citing security of supply as a top concern. A disruption, even briefly, could halt operations and incur immediate losses. For instance, Korean firms that turned to Russian oil as an alternative saw supplies abruptly cut following the outbreak of the war in Ukraine.

“Oil imports are typically secured through large, long-term contracts,” said a source at a local refiner. “Outside of the Middle East, most supply is spot-based, meaning it’s temporary, with greater price volatility. This makes refiners cautious about switching suppliers.”

The LyondellBasell Houston refinery is seen at sunset on June 18 in Houston, Texas, United States. [GETTY IMAGES/YONHAP]

Cost is another hurdle. U.S. oil — often cited as the most viable alternative — comes with higher transportation costs and longer shipping times. It takes 30 to 40 days to ship U.S. crude to Korea, compared to 20 to 25 days from the Middle East.

Moreover, American West Texas Intermediate (WTI) is light crude, while Middle Eastern oil is heavier. Since Korean refineries have operated for decades with facilities optimized for Middle Eastern crude, major equipment upgrades would be required to handle WTI.

Each refiner also faces unique constraints. Among Korea’s four major refiners — S-Oil, SK Innovation, GS Caltex and HD Hyundai Oilbank — S-Oil relies on Middle Eastern oil for over 90 percent of its imports, largely due to its majority shareholder, Saudi Arabia’s Aramco. HD Hyundai Oilbank, by contrast, has managed to reduce its reliance on Middle Eastern crude to around 40 percent thanks to more flexible refining systems capable of processing diverse oil types.

Dependence on a single supplier also weakens Korea’s bargaining position. And given the unpredictability of Middle East politics, experts agree on the need to diversify.

“With Korea relying entirely on imported crude, developing alternative sources is closely tied to national energy security,” said Yoo Seung-hoon, a professor of future energy convergence at Seoul National University of Science and Technology. “The government should consider offering incentives when refiners replace aging equipment, as part of a strategy to guide a gradual transition.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY KIM KI-HWAN [[email protected]]