Korea cushions Iran war oil supply shock as Japan's imports plunge

Korea’s crude oil imports from Saudi Arabia held up far better than Japan’s during the supply disruption tied to the Iran war, as alternative shipping routes and government-brokered supply deals helped Korea weather the crisis.

Korea imported 30.71 million barrels of Saudi crude oil in July, up 7.6 percent from a year earlier, according to a JoongAng Ilbo analysis of data from the Korea National Oil Corporation. Japan's imports of Saudi crude fell 6.6 percent over the same period, according to its Ministry of Economy, Trade and Industry. The contrasting trends came as Saudi Arabia's total crude oil exports in July declined 31.2 percent from a year earlier.

The gap was even wider in April and May, when disruptions to oil shipments through the Strait of Hormuz intensified.

Saudi crude exports fell 35.3 percent in April, and Japan's imports from the country plunged 57.7 percent on year. Korea also saw an on-year decline that month, but a smaller one of 34.4 percent.

In May, Saudi exports fell 44.5 percent on year. Japan’s imports of Saudi crude fell 58 percent that month, while Korea’s fell 27.9 percent.

Over the four months from April through July, Japan's imports of Saudi crude fell 41.2 percent from a year earlier, nearly double Korea's 21 percent decline. Korea imported less Saudi crude than Japan in May last year, but this May it imported roughly 1.5 times as much.

Korea’s steadier imports were largely the result of efforts by the government and domestic refiners to secure alternative supplies and shipping routes.

In April, a special envoy delegation led by then-presidential chief of staff Kang Hoon-sik visited Saudi Arabia, where Saudi officials agreed to give Korean companies priority in allocating 200 million barrels of crude from June through the end of the year. Some 50 million barrels that had faced shipping uncertainties in April and May were rerouted to bypass the Strait of Hormuz, including through the Red Sea port of Yanbu.

Korea also expanded shipments through the port of Fujairah in the United Arab Emirates (UAE), another route that bypasses the Strait of Hormuz. Korea’s crude imports from the UAE rose 17 percent on year to 70.52 million barrels in the first half.

Korea and Japan also took different approaches to managing their strategic oil reserves.

Japan released approximately 90 million barrels from government reserves in two rounds, in March and May. Korea held off on directly releasing its reserves and instead used an oil reserve swap system, under which the government lends crude oil to refiners and receives replacement supplies when their shipments arrive.

The system was designed to bridge temporary supply gaps caused by the time it takes for oil tankers to reach Korea, even after refiners secure alternative supplies. Approximately 26 million barrels were supplied through the swap system between March and June, according to Korea's Ministry of Trade, Industry and Resources.

S&P Global Energy, an analytics provider, highlighted the swap system in an April report, saying cooperation between the government and refiners had helped stabilize Korea’s crude supply.

In its September Insights magazine, the company said Asia’s largest crude importers had reshaped their procurement strategies by diversifying suppliers and developing routes that bypass the Strait of Hormuz, adding that “nowhere has that adjustment been more visible than in Korea.”

With crude imports recovering, domestic supply of petroleum products has also held relatively steady. Korea has secured crude supplies for October and November matching last year’s monthly average, according to the Trade Ministry.

The recovery has also enabled Korea to maintain stable exports of petroleum products to countries including the United States, Australia and New Zealand amid a global diesel shortage.

But the government is continuing efforts to secure crude oil supplies as tensions in the Middle East remain high.

In an Oct. 12 social media post, Minister of Trade, Industry and Energy Kim Jung-kwan said a Korean delegation had visited Saudi Arabia despite a Level 3 travel advisory, the second-highest on Korea’s four-tier scale. The delegation met with senior officials from Saudi Arabia's Ministry of Energy and state-owned oil giant Aramco to strengthen cooperation on crude oil supplies.

“The days when we could simply buy resources as long as the price was right are over,” Kim said, emphasizing the importance of cooperation between the government and businesses.

To ensure that efforts to diversify crude oil imports extend beyond a temporary response, the government plans to expand subsidies covering the additional shipping costs of importing crude from outside the Middle East. It also plans to support upgrades to refining facilities to enable them to process a wider range of crude oil grades.

Updated, Oct. 21, 2026: Fixed S&P Global Energy article report date, clarified September article information.


BY NAM SOO-HYUN [[email protected]]