The Impact of Low Oil Prices on South Korea

Abstract

South Korea is a major oil and LNG importer in Northeast Asia, most of which comes from the Middle East. In the face of the U.S. shale revolution, South Korea has pursued supplier diversification and regional energy trade collaboration. This brief examines the impact of low oil prices on both South Korea’s domestic energy policy and regional energy trade dynamics and discusses how low oil prices have become an issue of regional cooperation for oil market stability. The recent plunge in oil prices is likely to reverse energy and other infrastructural projects between South Korea and Russia and prolong South Korea’s oil and LNG dependence on the Middle East and the Persian Gulf. This will lead Seoul to strive to diversify oil and LNG supply sources beyond this region to include North America and East Africa.