Government designates naphtha strategic item, offers 1.5 trillion won support, stabilizes supply chains, controls fuel prices, and strengthens energy security measures.
Amid persistent geopolitical tensions in the Middle East, the government has taken decisive steps to mitigate disruptions in the supply of critical raw materials, particularly naphtha, which is heavily imported from the region. In a bid to safeguard industrial stability and maintain economic resilience, authorities have officially classified naphtha as an “economic security item.” This designation reflects its strategic importance to key sectors such as petrochemicals and manufacturing, and enables the government to deploy targeted policy tools to stabilize its supply chain.
The announcement was made by Koo Yun-cheol, who currently serves as Deputy Prime Minister and Minister of Economy and Finance, during an Emergency Economic Ministers’ Meeting and session of the Supply Chain Stabilization Committee held on March 18. Emphasizing the urgency of proactive intervention, he noted that timely action is critical in navigating crises and minimizing economic fallout. He reiterated the government’s commitment to swiftly reducing the burden on businesses facing uncertainties due to global supply disruptions.
As part of the response strategy, the government will closely monitor fluctuations in naphtha supply and demand, as well as the operational challenges faced by domestic companies. Authorities are also preparing contingency measures, including identifying and securing alternative sources of imports to reduce overdependence on the Middle East. In parallel, temporary export control mechanisms may be introduced to prioritize domestic supply and prevent shortages.
To further support affected industries, a substantial financial relief package has been introduced. A dedicated “special support for Middle East damage response” initiative will be established within the Supply Chain Stabilization Fund. Through this mechanism, the government plans to inject approximately 1.5 trillion won in emergency assistance. This funding will help companies offset increased procurement costs resulting from sourcing raw materials from alternative markets and will also provide liquidity support in the form of emergency operating capital.
Additionally, firms dealing with commodities that have a high reliance on Middle Eastern imports will benefit from preferential financing schemes. These include reduced interest rates, with discounts of up to 2.3 percentage points, aimed at easing financial pressure and ensuring continued operations during the crisis period.
Addressing concerns around domestic fuel prices, the Deputy Prime Minister also highlighted the need for immediate transmission of cost reductions to consumers. Following the implementation of a price cap on petroleum products earlier in the month, refiners have already lowered supply prices. Authorities have instructed gas stations to promptly reflect these reductions at the retail level. Strict enforcement measures will be undertaken to curb unfair practices such as hoarding, price manipulation, or refusal to sell fuel.
Beyond financial and regulatory measures, the government is also focusing on broader energy security strategies. These include diversifying energy import channels, enhancing nuclear power generation capacity, and encouraging demand-side management practices. If necessary, additional steps such as vehicle usage restrictions based on odd-even license plate systems may be considered to curb fuel consumption.
Lastly, in the context of the ongoing supplementary budget discussions related to the crisis, the government has emphasized a targeted approach to social and economic support. Special attention will be given to vulnerable populations, struggling industries, and regions disproportionately affected by the current situation, ensuring that relief measures are both precise and impactful.
