South Korea Extends Crude Oil Swap System With Private Firms Until End of June

The government extended the operation of its crude oil swap system with private firms until the end of June, the industry ministry said Tuesday. The arrangement lets refiners borrow crude from state stockpiles, mostly Middle Eastern grades, with an obligation to replace the volumes once alternative supplies arrive.

Officials introduced the mechanism in April after the outbreak of the U.S.-Israeli conflict with Iran.

Background and volumes The program was originally scheduled to end in May.

Through the first two months, the government exchanged a total of 21 million barrels under the swap, according to the Ministry of Trade, Industry and Resources. The ministry stated that South Korea has secured about 85 percent of its pre-conflict oil supply levels for July use and expects no major disruptions in August.

Official statements Industry Minister Kim Jung-kwan told a Cabinet meeting earlier Tuesday that August supply volumes continue to rise, reducing concerns about summer shortages. Last month the International Energy Agency warned that commercial oil inventories are declining rapidly and that markets could enter a tight period in July or August.