The latest drone strikes on Saudi Arabia’s crude processing facilities will have limited impact on South Korea the government has said, but it will consider releasing its oil reserves in case of supply disruption, a senior official said Tuesday.
“The strikes on Saudi Arabia’s key oil facilities over the weekend have heightened the risks in the Middle East region,” said Kim Yong-beom, first vice minister of finance.
“But considering the supply contracts and current (oil) reserves, there is little reason to be concerned about supply problems in the short term.”
Kim Yong-beom, first vice minister of finance, speaks in a meeting of senior economic policymakers on Tuesday. (Ministry of Economy and Finance)
The Ministry of Economy and Finance held a macroeconomic-finance meeting at the Korea Federation of Banks headquarters with senior officials of the Bank of Korea, Financial Services Commission and the Ministry of Trade, Industry and Energy.
“Meanwhile, the government will keep a stern watch on the oil market here and abroad, and maintain a readiness posture at all times, in case the ongoing turbulence prolongs,” Kim added.
The combined strategic oil reserves as of 2018 stood at 200 million barrels, of which 96 million barrels was held by the government, data showed.
When asked about a fuel tax cut to respond to the oil market situations, the vice minister dismissed the possibility.
“The restoration of fuel tax and the oil price (fluctuations) all happened recently. It is still too soon to discuss again (another fuel tax cut),” he said.
In November last year, the government lowered fuel taxes by 15 percent for six months, in an effort to alleviate the burden of small businesses and ordinary people. In May this year, the measure was extended until the end of August, with a reduction rate of 7 percent.
“The government will pre-emptively review its contingency plan for the financial market, in step with key events such as the US-China trade talks, the (forthcoming) rate-setting decision of the US Fed, and Brexit.”
By Bae Hyun-jung (firstname.lastname@example.org)