South Korea has secured a pledge from the United Arab Emirates to supply 24 million barrels of crude oil, its presidential office said on Wednesday, as authorities roll out measures to cushion the economy from fallout from the Middle East conflict.
Kang Hoon-sik, President Lee Jae Myung's chief of staff, told a briefing at the Blue House that the UAE had said it would give South Korea - the world's fourth-biggest oil importer - top priority for crude supplies.
"They clearly promised that there would be no country that receives oil ahead of South Korea, and that Korea would be number one priority in crude oil supply," Kang said, after returning from the UAE.
However, while he confirmed plans to urgently import 18 million barrels, Kang gave no time frame for their delivery and no details on potential shipping routes that would avoid the Strait of Hormuz, Reuters reported.
Iran's effective closure of the strait has forced the UAE to shut in production, cutting its oil output by more than half, while loadings at its Fujairah terminal have been disrupted by drone attacks.
Two supertankers carrying a total of 4 million barrels of Abu Dhabi's Murban crude that loaded at Fujairah are due to arrive in South Korea on March 29 and April 1, Kpler data shows.
The last cargo of naphtha loaded on February 20 and offloaded in South Korea on March 14, according to Kpler data.
Total emergency imports from the UAE would reach 24 million barrels, Kang said. Deliveries would be made on three UAE-flagged vessels and six South Korean-flagged ships.
South Korea imports almost all of its energy, with about 70% of its crude oil shipments and 20% of liquefied natural gas typically sourced from the Middle East, according to Korea International Trade Association data.
It is also a big importer of naphtha, which is broken down into petrochemicals used in plastics for automobiles, electronics, clothing and construction.
The emergency supply agreement comes as South Korea moves to shield companies and consumers from surging energy costs triggered by the Middle East crisis.
Finance Minister Koo Yun-cheol said earlier on Wednesday the country will limit naphtha exports and temporarily designate the feedstock as a supply-chain economic security item.
The government will boost financial support for affected petrochemical companies by 1.5 trillion won ($1.01 billion), including for the cost of alternative imports and preferential interest rates for firms handling high-risk economic security items, Koo said.
President Lee said on Tuesday the government should draw up contingency plans to restrict vehicle use on designated days if the Middle East crisis drags on.
The government has also imposed the country's first fuel price cap in nearly 30 years.
To ease reliance on oil and LNG, Asia's fourth-largest economy on Monday lifted caps on coal-fired power generation and moved to raise nuclear reactor utilization to around 80%.
