Korea faces energy strain as oil supply tightens

The crisis in the Middle East has effectively paralyzed the Strait of Hormuz, a chokepoint through which roughly one-fifth of the world’s oil supply passes, sending global prices sharply higher. There is little indication that the sea lanes will reopen anytime soon. Even if hostilities subside, repairing damaged oil facilities and port infrastructure across the region will take time. The International Energy Agency has warned that the conflict is causing what could become the largest disruption to the global oil supply chain on record.

President Lee Jae-myung has called for urgent, multi-pronged efforts to curb energy demand. Among the measures under consideration are alternate driving days and other restrictions aimed at encouraging nationwide conservation. The government has moved to strengthen its buffer by securing an additional 18 million barrels of crude from the United Arab Emirates, but that cushion could erode quickly if the crisis drags on.

South Korea’s energy consumption remains high relative to the size of its economy. Policies such as tax cuts or fuel price controls may soften the immediate impact of supply shocks, but they also weaken incentives to conserve. Without meaningful reductions in consumption, the country’s import bill will rise, increasing pressure on foreign currency reserves and forcing the government to commit significant fiscal resources to stabilize prices.

Meaningful savings can begin with simple behavioral changes. Lowering indoor heating by just 1 degree Celsius can reduce energy use by about 7 percent. Driving at more moderate speeds on highways also cuts fuel consumption, while shifting to public transportation or walking short distances delivers both economic and health benefits. Expanding incentives for regular transit use, including programs such as K-Pass, could further support more sustainable commuting patterns. If conditions worsen, broader adoption of remote work should also be considered.

Incremental improvements in efficiency can add up quickly. Replacing outdated windows or appliances reduces energy waste, while programs such as Korea Electric Power Corporation’s Energy Cashback reward households for lowering electricity use. Targeted subsidies for energy-efficient purchases can help ease the burden on lower-income households. At the same time, South Korea, which depends on the Middle East for about 70 percent of its oil, should use this moment to accelerate efforts to diversify its energy mix, including greater investment in nuclear, solar and wind power.

Ultimately, responding to this crisis will require changes that begin at the household level. Choosing to walk rather than drive, reducing heating and hot water use, adopting energy-efficient appliances, and turning off unused electronics are practical steps within reach of most consumers. While individually modest, such actions, taken collectively, can ease pressure on imports, limit fiscal strain and help the country navigate a period of heightened global uncertainty.