South Korea moves to curb exports, secure naphtha

The South Korean government is preparing to intensify market intervention as prolonged tensions in the Middle East heighten concerns over naphtha supplies, a key petrochemical feedstock. Planned measures include export restrictions, a ban on hoarding and possible additional fuel tax cuts to cushion price volatility.

Yang Ki-wook, director general for industrial and resource security at the Ministry of Trade, Industry and Energy, said at a daily briefing of the government’s Middle East response task force on March 24 that authorities are preparing measures to mandate reporting on naphtha production and imports, ban hoarding, and restrict exports. “We plan to take action within this week,” Yang said, signaling a decisive response as the prolonged closure of the Strait of Hormuz strains domestic supply.

Naphtha, a fundamental input for plastics and other petrochemical products, is often referred to as the “rice of the petrochemical industry.” About 55 percent of South Korea’s demand is met by domestic refiners, with the remainder reliant on imports. Export controls are intended to redirect domestically produced volumes to the local market to help ease supply pressures. On March 18, the government temporarily designated naphtha as an economic security item, creating a legal basis for phased measures such as mandatory reporting of production, imports and shipments, along with bans on hoarding and export limits.

Yang said authorities are also preparing to invoke an emergency supply adjustment order if market conditions fail to stabilize. Such a step would enable the government to directly oversee production, supply and trade, including allocating volumes across industries.

Deputy Prime Minister and Finance Minister Koo Yun-cheol said at a Cabinet meeting at the presidential office that the government will review the ceiling on petroleum product prices, which is adjusted every two weeks, on March 27. He cautioned that rising global oil prices could push up caps on some products and said additional fuel tax cuts are under consideration to limit the burden on consumers.


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