Industry Ministry: South Korea holding talks with firms over potential imports of Russian oil and naphtha

South Korea’s Ministry of Trade, Industry and Resources is evaluating potential imports of Russian oil and naphtha to address supply shortages exacerbated by disruptions in the Strait of Hormuz, according to industry officials. Domestic petrochemical firms, including Yeochun NCC, Lotte Chemical, LG Chem, and Hanwha Solutions, have warned of operational risks as stockpiles of naphtha—a critical feedstock—are projected to deplete within weeks despite reduced production levels. The government has designated naphtha as an "economic security item", enabling measures such as export restrictions, market diversification support, and stockpile expansion.

Deputy Prime Minister and Finance Minister Koo Yun-cheol emphasized that restricting naphtha exports would mitigate shortages, but industry stakeholders argue current measures remain insufficient. Russian naphtha, which accounted for nearly 30% of South Korea’s imports before Western sanctions, is seen as a viable alternative, though geopolitical challenges persist. While a U.S. 30-day waiver permits purchases of sanctioned Russian oil, the European Union's opposition to energy trade with Russia complicates compliance for South Korean firms bound by international regulations.

To safeguard domestic supply, the government has also imposed export caps on refined products, including naphtha, limiting shipments to 100% of 2025 levels. Refiners are required to maintain domestic supply at 90% of prior-year volumes for March and April, with potential compensation for incurred losses. However, market participants note that geopolitical tensions and EU sanctions continue to create uncertainty, limiting the feasibility of resuming Russian imports. The ministry has instructed companies to submit proposals for review, but a final decision remains pending.