South Korea Targets Cut in Middle East Crude Reliance to 50% by 2035
Seoul's 10-year resource security plan targets a 20-percentage-point cut in Hormuz-exposed crude supply, alongside a gas import cap and a 20-million-barrel reserve build.
South Korea's industry ministry drafted a 10-year natural resource security plan aiming to reduce Middle East crude imports to 50% of total supply by 2035, down from a current 70% share, Reuters reported on Wednesday (2026-09-23), citing the ministry.5
The Hormuz exposure behind that figure is substantial. Most of the 70% transits the Strait of Hormuz, the ministry said, making South Korean refiners directly vulnerable to the disruptions triggered by the Iran conflict. ICE Brent crude front-month was at $99.10 per barrel on Wednesday (2026-09-23), up on the session but still pricing supply friction rather than an outright blockade.5
The plan adds two related targets: a 20 million barrel increase in oil reserves by 2030, and a gas import cap limiting Middle East supply to 30% of South Korea's total gas procurement over the next decade.5
The conflict has already reshaped Seoul's fuel mix. Coal-fired power generation in South Korea jumped 39.7% year-over-year to 10,733 gigawatt-hours in April (2026-04), the biggest annual increase since August 2019, while gas-fired output fell 6.4%, according to Korea Power Exchange data cited by Reuters.1
Japan showed the same pattern. Coal-fired supply there rose 11.1% in April (2026-04), its fastest pace in at least a year, while gas-fired power dropped 12.9% to 16,447 gigawatt-hours, Reuters reported, citing data from the Japanese Electricity Market and Policy Institute. Asian spot LNG prices climbed 62% since the start of the war, versus a 13% rise in the Newcastle coal benchmark, per Reuters.1
The JKM Asian LNG benchmark traded at $26.05 per MMBtu in Wednesday (2026-09-23) trade, keeping coal the cheaper option for flexible generation. Newcastle physical coal was priced at $137.25 per tonne on Wednesday (2026-09-23). Contrarian supply signals point to potential downside in Newcastle prices if LNG tightness resolves, though that case has not registered in the physical market yet. [LIVE]
The IEA drew the Hormuz-coal link explicitly in September 2026 (2026-09-11): almost no coal transits the strait, but restricted LNG supply has pushed some power producers back toward the fuel, the agency said. The IEA now forecasts global coal consumption will reach 8.94 billion tonnes in 2026, up 1.2% from 2025 and the highest on record, per the agency's mid-year update.4
Nuclear outages and expensive gas drove that increase, the IEA said. Returning reactors could curb coal demand later in 2026, the agency noted, a caveat that matters for Seoul if Korean nuclear availability improves on schedule.4
South Korea and Australia agreed in May (2026-05-13) to deepen cooperation on energy security and critical minerals, with Middle East supply risks cited as motivation, asian-power.com reported. Specific contracted volumes were not disclosed.2
South Korean refiners lifted processing rates and grew kerosene exports to a nine-month high by June 2026, with South Korea's share of Asia Pacific jet fuel imports rising to 30% year to date from 23% for full-year 2025, per Kpler data cited by Reuters. The processing recovery reflected crude arrivals returning to pre-crisis volumes. The underlying supply mix, predominantly Middle Eastern, did not change.3
The plan does not specify where replacement crude would come from. Contracting non-Middle East volumes at competitive terms from West Africa, the Americas or other long-haul sources is the unsolved piece of the strategy, and the one that crude traders will be watching most closely.5