Expert SpeakRaisina Debates
Published on Apr 13, 2026
The Hormuz crisis has exposed South Korea’s energy vulnerability, compelling urgent supply-chain adjustments and prompting a reassessment of its alliance calculus with the United States
The Strait of Hormuz crisis has hit Asian countries hard, given their growing dependence on Gulf nations for energy security. While South and Southeast Asian countries have been at the centre of attention, others in the region are also facing significant challenges, including supply chain bottlenecks and their second- and third-order effects. One of the countries hardest hit is South Korea, which is confronting an energy and supply chain crisis that threatens its economic security and growth. While these risks carry serious implications, they also present an opportunity to re-evaluate some of South Korea’s policy positions on energy and alliances. The ongoing crisis and South Korea’s approach to managing its impact merit closer examination.
Hormuz Strait Fallout Threatens Korea’s Energy Security
Like many Asian countries, South Korea is heavily dependent on the Gulf for its crude oil supply. It is estimated that 70.7 percent of South Korea’s crude oil and 20.4 percent of its LNG come from West Asia. Several foreign companies have invoked force majeure due to supply chain disruptions stemming from the US–Iran conflict, thereby disrupting critical industry operations and raising nationwide concerns.
Starting at the top, South Korean President Lee Jae Myung expressed his concern over the situation. Addressing a town hall, he cautioned that the situation is worse than expected and could further deteriorate. Similarly, speaking on the US-Iran war during an emergency meeting, Kim Jung-kwan, South Korean Industry Minister, compared the evolving situation to wartime and called to “prepare for all possible scenarios that could lead to a major crisis.” He further warned that if the situation persists, it might become “the worst ever supply chain disruption” the country has witnessed.
Several foreign companies have invoked force majeure due to supply chain disruptions stemming from the US–Iran conflict, thereby disrupting critical industry operations and raising nationwide concerns.
Industries dependent on Naphtha and Helium gas are also under stress. The country is facing a shortage of naphtha (also called “rice of industry”), a key feedstock used in the petrochemical sector. The export disruption from West Asia—which accounts for about 45 percent of global supply—has also affected industries. The halt in helium imports, an important gas used in the semiconductor chip industry, particularly for operating lithography machines, has also raised concerns in the AI industry. In 2025, Korea imported about two-thirds of its helium from the Ras Laffan Industrial Complex in Qatar, which accounts for around one-third of the global helium supply. Currently, Korea has sufficient helium stocks, which are expected to last until June.
Second and Third Order Effects
Foreseeing the impact, the country has already implemented measures for government employees and is considering extending the same to citizens, such as driving restrictions. The second-order effects of these supply chain bottlenecks are happening in other sectors, including fertilisers, plastics, aluminium, and automobile exports. Besides, the stock market has also reacted sharply, triggering a weakening of the Korean won against the US dollar. Beyond the immediate impact, South Korean policymakers remain concerned about the passage of a bill allowing Iran to collect a US$ 2 million toll per vessel passing through the Strait of Hormuz. If such a mechanism becomes permanent, it would have ripple effects on oil prices, logistics, insurance costs, operations and profit margins of industries.
Accounting for both energy and industrial supply chain shocks, the situation is placing considerable strain on South Korea, with wide-ranging spillover effects across key sectors
Accounting for both energy and industrial supply chain shocks, the situation is placing considerable strain on South Korea, with wide-ranging spillover effects across key sectors. There are also growing concerns about stagflation if high inflation, high oil prices, and high exchange rates persist. If the crisis continues, it holds the potential to endanger the country’s economic security and lead to an inflation spike. Nonetheless, this crisis has also given an opportunity to re-strategise some policies and assumptions for South Korea.
Crisis Response and Policy Recalibration
Even though South Korea’s energy and economic crisis has the potential to spark serious supply chain disruptions, it also presents a moment of introspection regarding Seoul’s energy and foreign policy. On the energy front, amid the crisis, the government has made several changes to coal and nuclear energy policy. It has increased nuclear utilisation from around 70 percent to 80 percent and has decided to fast-track the restart of an additional five units by early June. Similarly, limits on coal-fired power generation, capped at 80 per cent of installed capacity, have been lifted to bolster energy supply, potentially delaying coal plant shutdown timelines. The crisis will influence South Korea’s energy policy going forward.
Even though South Korea’s energy and economic crisis has the potential to spark serious supply chain disruptions, it also presents a moment of introspection regarding Seoul’s energy and foreign policy
With its oil reserves lasting only two months, Korea has turned to partners beyond the Gulf—including Africa, the Americas, and Central Asia—to secure alternative sources of crude oil. In the meantime, it has secured 24 million barrels of crude oil, with 6 million barrels expected to be delivered by mid-April from the UAE to stabilise the oil and energy supply. Furthermore, the government has announced an oil swap program as a stopgap measure, lending crude reserves to refiners on the condition of future deliveries. While attempts to secure Russian crude oil have not been successful, it has successfully imported 27,000 tons of Russian Naphtha for the first time since 2022. South Korea also reached out to India to request the import of naphtha. In the meantime, the country has imposed a five-month ban on its exports. To further cushion the economic shock, the President has announced a set of measures. These include 4.8 million won cash handouts to 35.8 million residents, covering the bottom 70 percent of income earners; 5 trillion won to support the fuel price cap; 1.9 trillion won for youth startups and job support; 9.7 trillion won for local government finances; and 1 trillion won for government bond repayment.
US-South Korea Alliance Dynamics Post-War
Since the end of the Korean War, South Korea has aligned its military and foreign policy largely with its ally, the United States. As a result of this alliance, Seoul has reaped economic benefits and gained the military edge over its Northern neighbour, North Korea. Nonetheless, it has also incurred losses as a result of its alliance, including the recent Hormuz crisis. Like the COVID-19 pandemic, the West Asia crisis has again forced South Korea to re-strategise its energy and economic security, including re-examining the supply chain bottlenecks. However, the Gulf crisis will likely influence South Korea’s alliance with the US under the Trump administration.
European and Gulf Nations’ refusal to send their naval vessels and participate in operations against Iran upon the US repeated requests and threats has not gone unnoticed in Seoul
European and Gulf Nations’ refusal to send their naval vessels and participate in operations against Iran upon the US repeated requests and threats has not gone unnoticed in Seoul. This new development will likely set a precedent that will shape Seoul’s calculations going forward, including in its diplomatic engagement and even in the event of a conflict breakout in the Taiwan Strait and Northeast Asia. Similarly, Iran’s attack on the US’s bases in the Gulf has also been carefully observed in South Korea. These developments will likely be taken into account when exploring the possible roles of South Korea and US Forces Korea (USFK) in future contingencies. This episode will once again reignite the debate over strategic flexibility.
In conclusion, the US-Iran war has had no benefits for South Korea. It has adverse effects not only in the short term but also in the long term for the economy and national security. On top of that, the US’s disregard for the economic and energy security of its Indo-Pacific allies has exposed the nature of the alliance under President Trump. Even though resolving the energy crisis remains the South Korean government’s focus right now, developments and consequences of the war will be factored in future alliance conversations.
Abhishek Sharma is a Junior Fellow with the Strategic Studies Programme at the Observer Research Foundation
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Abhishek Sharma
Abhishek Sharma is a Junior Fellow with ORF’s Strategic Studies Programme. His research focuses on the Indo-Pacific regional security and geopolitical developments with a special
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