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January 28, 2022updated 17 Mar 2022 5:19am

South Korea in discussions over oil prices amidst Ukraine conflict

Escalating tensions between Ukraine and Russia are pushing fuel prices up, fuelling concerns of continued disruptions.

By Scarlett Evans

Continued tensions in Ukraine are driving concern in the oil and gas industry over supply chain disruptions and fuel price hikes that show no signs of abatement. Meetings were conducted in South Korea this week to discuss contingency plans amidst rising crude oil and LNG prices.  

The nation’s Ministry of Trade, Industry and Energy (MOTIE) hosted a meeting with energy importers earlier this week to reassess energy supply conditions, with state-run group Korea Gas Corp, Korea National Oil Corp, and offshore plant manufacturers joining the talks.  

“The participants expressed concerns about price hikes of crude oil and LNG, with the forecast of possible supply disruptions due to the Ukraine crisis,” S&P Global Platts reported a MOTIE official saying. “Energy prices are expected to get stronger even without armed conflicts there.” 

“The government will operate an early warning system on the supply of key industry materials and energy resources, while closely monitoring the situation,” Vice Industry Minister Park Jin-kyu said at the meeting. “We will be fully prepared, while bearing the worst-case scenario in mind.” 

South Korea is typically susceptible to the impacts of fuel price hikes as it imports the majority of its crude oil and LNG. While the short-term impacts of the conflict are anticipated to be minimal on the country, prolonged tensions could have knock on effects on global supply chains. 

Conflict between Russia and Ukraine has been ongoing for years, though the recent rejection of Russia’s demands that Ukraine be excluded from NATO have sent tensions to boiling point. With Russian troops amassing at the border between the nations, there are fears that an invasion is imminent.  

The US and Germany have issued warnings that such action will put the Nordstream 2 pipeline at stake, and that a “strong package of sanctions” are being planned.  

Russia has so far denied claims that it is planning to invade. 

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