South Korea to release record 22.46 million barrels of oil reserves in emergency action

South Korea will release a record 22.46 million barrels of strategic oil reserves to help reduce soaring international benchmark crude prices amid the conflict in the Middle East, the Ministry of Trade, Industry, and Resources announced at midnight on March 12.

This decision aligns with an agreement among member countries of the International Energy Agency for an emergency release of 400 million barrels to stabilize the global oil market in response to the conflict in the Middle East and disruptions in tanker flows in the Strait of Hormuz, the ministry said in an official government policy briefing statement.

Among IEA members, South Korea holds the fifth-largest oil reserves, according to the latest IEA data published on Feb. 12.

"The volume of 22.46 million barrels is the largest ever in South Korea's history of releasing strategic oil reserves," the ministry said.

This marks South Korea's sixth release of strategic oil reserves since its first release of 4.94 million barrels in 1990, following the 1991 Gulf War, the 2005 hurricanes Rita and Katrina, the 2011 civil war in Libya, and the 2022 Ukraine-Russia war, according to the ministry.

"The IEA-led cooperation is expected to significantly contribute to stabilizing the international oil market," the ministry said. "Furthermore, the government will work to minimize the burden on the national economy and the impact on people's livelihoods by closely cooperating with major countries to address high oil prices resulting from the Middle East crisis."

After this release, Asia's third-largest crude importer will still hold 77.64 million barrels of strategic reserves, as the country currently maintains 100.1 million barrels of government-controlled reserves, according to Platts calculations and analysis of Korea National Oil Corp. (KNOC) data. Platts is part of S&P Global Energy.

Additionally, South Korea holds around 10 million barrels of foreign oil through joint storage agreements, including 4 million barrels of Kuwait's Kuwait Export Crude and 4 million barrels of light sour grades from Abu Dhabi National Oil Company, Platts reported previously.

Kuwait Petroleum Corporation and ADNOC officials confirmed the joint storage agreements during Platts market engagement and discussion sessions with KNOC from October 2024 through January 2026.

South Korea is well prepared for unforeseen events, such as logistical disruptions in the Strait of Hormuz, as it holds one of the largest state and commercial oil reserves globally, Platts reported previously, citing feedstock inventory managers and analysts at three major refiners based in Ulsan and Seoul.

South Korea receives leasing fees and retains the right of first use of these volumes for domestic release in case of emergencies or supply disruptions, according to the ministry.

KNOC operates nine storage bases, including Geoje, Ulsan and Yeosu, which can hold a total of 146 million barrels of crude oil and oil products, including tunnel-type underground tanks and the world's single largest oil storage base, according to the state-run petroleum entity's official website, as well as its monthly market analysis and official reports.

Of the total capacity, 131.1 million barrels are for crude oil, 14.9 million barrels for refined products and 6.2 million barrels for LPG, according to KNOC's statements, official market reports, and official statements.

South Korean oil products supply

Although many Asian refiners are considering cutting run rates and limiting oil product exports due to disruptions in Middle Eastern sour crude deliveries, major South Korean refiners have indicated they will strive to fulfill their term gasoline, jet fuel, and gasoil supply agreements with customers across Asia, Oceania, and North America, Platts previously reported.

South Korea -- Asia's top clean oil products supplier -- is capable of fulfilling gasoline, jet fuel, and gasoil/diesel term supply contracts with customers across Asia, Oceania, and North America, 11 product managers and marketing executives at five major South Korean refiners and downstream companies told Platts during market discussions over March 3-11.

However, if feedstock sour crude tanker flows remain disrupted for more than one or two months, second-quarter term supply contracts could become "rather difficult," said a middle distillate marketing manager at a major South Korean refiner based in Ulsan.

South Korea exported 37.04 million barrels of gasoline, jet fuel and gasoil combined in January, up 19.2% from 31.08 million barrels sold overseas a year earlier, the latest data from KNOC issued Feb. 27 showed.