Aju Press - Asia News Hub

Journalist

Kim Dong-young김동영

ReporterSamsung Biologics, CJ CheilJedang, LG Chem, Celltrion, Naver, Krafton, Nexon, Hyundai Mobis etc. & energy, game, food, bio, petrochemical, AI

Kim Dong-young is a bilingual journalist at AJU Press (AJP), covering Korean tech, energy, and bio/pharma.
He reports from the field at events like CES and APEC, runs AJP's YouTube channels,
and is pursuing a master's at Sogang's MOT program. "I try everything in this AI era that can improve yet preserve the facts. Journalism still serves as my core."

Latest by Kim Dong-young

Kakao CEO apologizes to staff as union secures strike right after talks collapse SEOUL, May 28 (AJP) - Kakao CEO Chung Shin-a offered a public apology to employees as the company's union secured the legal right to strike following the collapse of a second mediation session, raising the prospect of the tech giant's first-ever headquarters walkout. Chung issued the apology through an internal notice Thursday, saying she was "sincerely sorry" for failing to quickly dispel growing uncertainty within the company. "Negotiations have dragged on, and I take seriously the fact that our crew members have had to wait this long," she said, using Kakao's in-house term for employees. The CEO struck a conciliatory tone, stressing that labor and management ultimately share the same direction and must work through their differences through dialogue. She also hinted at a partial organizational reshuffle, saying the company needed to reestablish a stable operational framework and reset its service priorities. Mediation talks at the Gyeonggi National Labor Relations Commission broke down late Wednesday after running until 11 p.m., leaving both sides without an agreement. The failure hands the union the legal standing to launch strike action, with about 1,200 union members set to march through the Pangyo Station area on June 10. The union said in a statement that it would not entirely close the door on further dialogue, but added it could "no longer resolve the matter through waiting and patience alone," and would move ahead with preparations for a June strike. The union accused management of passive bargaining, unilaterally paying out bonuses mid-negotiation and repeatedly swapping its lead representatives — moves it said had eroded trust. The central dispute centers on whether Kakao's annual 5-million-won restricted stock unit grants should count as performance pay, a classification the union firmly rejects. Kakao said it would keep communication channels open with the union even after the mediation process concluded. Shares of Kakao traded at 38,700 won per stock on 1:22 p.m., 4.44 percent lower than a day before and roughly 37 percent lower than earlier this year. 2026-05-28 13:29:26
AJP DEEP INSIGHT: Hormuz's final tug-of-war — nuclear stakes, civilizational fault lines, and a new world order in the AI age SEOUL, May 28 (AJP) - In late May 2026, the world is watching the Middle East once again with unflinching attention. Explosions continue to echo across the Strait of Hormuz. The United States and Iran are simultaneously pursuing negotiations and military action. The White House signals "progress." Yet in the same breath, President Donald Trump warns that he could "finish it again" if necessary. Iran insists it intends to uphold the ceasefire, while condemning limited American airstrikes as violations of it. What the world is witnessing is a strange kind of war. Not a full-scale conflict, but not genuine peace either. Neither a ceasefire nor a true end to hostilities. Negotiations proceed even as the guns keep firing. This is the defining character of the 21st-century gray zone war. But its essence runs deeper than any conventional military clash. Beneath the surface lie nuclear ambitions and oil, the dollar system and the U.S.–China rivalry for global supremacy, the collision of Islamic and Jewish civilizations, and the contest over supply chains in the age of artificial intelligence. The Strait of Hormuz has become more than a body of water. It is the fault line of the entire world order. The most striking feature of the current crisis is that war and diplomacy are advancing in parallel. Washington and Tehran are reportedly discussing a memorandum of understanding toward an end to hostilities, and both sides have sent signals that progress is being made. The U.S. State Department and White House have indicated that negotiations have not collapsed entirely, and Iran has officially kept the door to a diplomatic resolution open. Yet simultaneously, U.S. forces launched fresh airstrikes on Iranian military installations near the Strait of Hormuz within days of the latest exchange. Washington described the strikes as defensive, citing the interception of four Iranian drones and the destruction of a ground control station preparing to launch a fifth. On the surface, it appears a limited confrontation. Yet global financial markets and the international community do not view it that way. The reason is simple: the Strait of Hormuz is the heart of the world's oil supply chain. A critical share of the world's seaborne crude passes through this narrow passage each day. It is the energy lifeline of manufacturing nations such as South Korea, China, and Japan. Any prolonged blockade or sustained instability here would send oil prices surging, fracture global logistics, and risk reigniting inflation. Washington understands this better than anyone. Trump has cultivated the image of a president who does not drag out wars. His preferred method is coercion and negotiation punctuated by limited military action — a strategy designed to bend adversaries without committing to full-scale conflict. But Iran does not operate on an American timetable. Where the United States wants speed, Iran deploys time itself as a weapon. That is an ancient Persian survival strategy. America is a young superpower, barely 250 years old. Iran is a civilization with 5,000 years of memory. It has learned, across centuries of foreign pressure and imperial domination, how to endure. And so, as American military pressure intensifies, Iran's response is not frontal confrontation but a strategy of delay and psychological attrition. In the current crisis, rather than launching immediate large-scale retaliation, Tehran has pursued managed tension. It knows the dangers of total war all too well. The Iranian economy has been hollowed out by sanctions. Youth unemployment, rising prices, and deep systemic fatigue have accumulated at home. But Washington, too, has no appetite for a full war. The American economy has not fully escaped inflationary pressure. For Trump, with domestic politics always in view, a prolonged conflict carries serious political risk. The result is a dangerously balanced standoff in which neither side can deliver a decisive blow nor easily back down. Four Fault Lines at the Heart of the Negotiations The current U.S.–Iran negotiations revolve around four core disputes. The first, and most fundamental, is the nuclear question. Trump has repeatedly and unequivocally stated that Iran acquiring a nuclear weapon is an absolute red line. Washington's most acute concern is Iran's stockpile of approximately 440 kilograms of uranium enriched to 60 percent purity. Nuclear experts generally define weapons-grade uranium as enriched to around 90 percent, but material at 60 percent is already considered a significant danger threshold — technically, further enrichment to weapons-grade levels is achievable within a short window. The United States sees no path to a post-war settlement without eliminating or placing that material under verifiable control. From Tehran's perspective, however, nuclear capability is not merely a weapon. It is an insurance policy for regime survival. The fate of Libya's Muammar Gaddafi — who dismantled his nuclear program only to see his government collapse and himself killed — remains a defining trauma for Iran's leadership. No Iranian government can lightly surrender that leverage. The second dispute concerns the handling of enriched uranium. Washington has expressed strong reluctance to allow China or Russia to take custody of Iran's highly enriched stockpile. The logic is straightforward: both are American strategic rivals. The more realistic alternative may be third-country management. Pakistan presents a particularly intriguing option. It is the Muslim world's first nuclear-armed state, maintains a strategic relationship with China, is not fully hostile to the United States, and has deep ties with Saudi Arabia. A model under which some portion of Iran's highly enriched uranium is stored temporarily in an internationally co-managed facility on Pakistani soil — under International Atomic Energy Agency supervision — could allow Washington to address its proliferation concerns while offering Tehran a face-saving exit. Diplomacy, after all, is ultimately the art of creating an off-ramp for the other side without demanding their complete humiliation. The third issue is the Strait of Hormuz itself. This is not merely a shipping lane. It is a vein of modern civilization. The global economy still runs on oil and liquefied natural gas. The AI age has arrived, but semiconductor fabrication plants and data centers consume extraordinary quantities of energy. AI is, at its core, a massive energy consumer. The data centers, chip factories, cloud server farms, and hyperscale AI computing systems that power the new economy require energy on a scale that strains the imagination. That is precisely why America's big tech companies are racing to secure nuclear power, LNG, and renewable energy sources. The AI age is less an era "after oil" than an era of energy power restructuring. The Strait of Hormuz will therefore remain a critical variable in the global economy for the foreseeable future. For China in particular, Hormuz is a lifeline. China is the world's largest manufacturing economy and one of its largest crude oil importers. Its factories, logistics networks, cities, and industrial zones run on Middle Eastern energy flows. A prolonged disruption to Hormuz would deliver a potentially crippling blow to the Chinese economy. Washington understands this clearly. The American strategy in the region therefore extends beyond pressuring Iran. It also functions as a means of exerting leverage over China's energy supply chain — linking the Middle East crisis directly to the broader U.S.–China contest for global primacy. China, in turn, has deepened its strategic ties with Iran, as has Russia. Meanwhile, the United States seeks to build a new regional order centered on Saudi Arabia, the UAE, and Israel. The Middle East is becoming the intersection of a new cold war. If the original Cold War was a clash between liberalism and communism, the present contest is far more complex. AI supremacy and semiconductor supply chains, control over energy and maritime logistics, the dollar system and digital finance, religion and civilization — all of these are simultaneously in play. The dollar question is particularly important. The United States has used dollar dominance to exert control over the global economy. The SWIFT payment system and the international financial architecture are, in practice, American-centered structures. Sanctions against Iran were ultimately a financial blockade executed through that dollar system. Yet China, Russia, and certain Middle Eastern states have been quietly expanding their use of alternative arrangements — renminbi-denominated payments, gold transactions, and energy trades settled in local currencies. None of this yet threatens dollar hegemony. But Washington senses the risk. The reason is that one of the foundational pillars of dollar primacy has always been the petrodollar system — the convention by which Middle Eastern oil is priced and settled in dollars. If the Middle East order shifts from American dominance toward a multipolar framework, the dollar system itself will face long-term structural pressure. Beyond the Abraham Accords: The Case for a 'Noah Covenant' The conflicts now tearing through the Middle East are not simply clashes of national interest. They carry within them the collision of Jewish and Islamic civilizations, the rivalry between Shia and Sunni power blocs, and the confrontation between an American-led order and a multipolar alternative. The Trump era's Abraham Accords opened a new current in the region — the emergence of a pragmatic framework for coexistence centered on Israel, the UAE, and Saudi Arabia. But Iran remains outside that framework. That absence matters enormously. The path forward must go beyond the Abraham Accords toward something that might be called a "Noah Covenant." Judaism, Christianity, and Islam ultimately share a common root. Among the descendants of Noah in the biblical tradition, the line of Shem — the Semitic lineage — connects to the spiritual origins of the Jewish, Arab, and Persian worlds. The region's genuine peace can only begin from the honest recognition that "the other side cannot be completely eliminated." Coexistence is not defeat. It is survival. Three Axes Moving Global Financial Markets Global financial markets are currently moving along three great axes. The first is the AI revolution. The second is the U.S.–China rivalry for supremacy. The third is Middle East risk. Until now, global equity markets have been driven by the AI rally. American AI semiconductor companies and big tech firms remain the dominant force. But the Middle East variable represents the single greatest risk capable of destabilizing that trajectory at any moment. If Washington and Tehran achieve a limited agreement and Hormuz stability is preserved, global markets will likely resume their AI-led advance. But if negotiations collapse entirely and the Hormuz crisis escalates in earnest, international oil prices could spike sharply and global inflation could re-emerge. The U.S. Federal Reserve would be unable to cut interest rates freely. The world economy would face the prospect of stagflation. Chinese manufacturing and European industry would absorb severe damage — and South Korea would not be spared. What This Means for South Korea South Korea is geographically distant from the Middle East, but it sits in no safe zone. The Korean economy is export-driven and heavily dependent on energy imports. Instability in the Strait of Hormuz translates directly into higher costs for Korean industry. Companies such as Samsung Electronics and SK hynix ultimately grow atop a foundation of global financial and energy stability. A surge in international oil prices and geopolitical turbulence would weigh on the entire Korean equity market. South Korea must therefore pursue three objectives simultaneously: diversification of its energy supply chain, reinforcement of its competitive industrial capabilities in AI and semiconductors, and a strategy of calibrated diplomatic balance in the Middle East. The world today does not move on military force alone. This is an era in which energy and AI, finance and supply chains, civilization and geopolitics all move together. The Strait of Hormuz is not simply a body of water. It is a microcosm of the entire 21st-century world order. And at this moment, humanity is testing that order on the surface of that sea. What is needed is not a balance of war, but an architecture of coexistence. Not the terror of nuclear weapons, but a system of trust and verifiable management. Not the transactional pragmatism of the Abraham Accords alone, but the civilizational imagination to move toward a Noah Covenant. That may be the only path through which the Middle East — and the world — survives what comes next. 2026-05-28 12:48:30
Hyundai Mobis joins Eclipse Foundation's open-source SDV project SEOUL, May 28 (AJP) - Hyundai Mobis announced it has joined the Eclipse Foundation's Software-Defined Vehicle working group and will contribute to the S-Core project, a global open-source initiative to standardize the software platforms that underpin next-generation connected vehicles. The S-Core project, launched in late 2024 by a consortium of European firms, aims to build a common middleware layer for SDV systems certified to functional safety standard ASIL-B — the first of its kind built on an open-source foundation. Thirteen companies are currently involved in the effort, pooling resources to reduce duplicated investment and accelerate development of the shared technical base that applications such as autonomous driving depend on. Hyundai Mobis said Thursday it marks the first time the company has opened its proprietary code to outside developers. The company will contribute its container solution technology, which isolates individual software processes running on Linux to prevent interference between them. Through the project, Hyundai Mobis said it expects to collaborate with a broad range of automakers, parts suppliers, and software specialists, while positioning its technologies as candidates for global industry standards. The company added that open-sourcing its code is itself a public demonstration of confidence in its software capabilities. 2026-05-28 11:21:20
Naver pledges 1 trillion won for creators in AI shift SEOUL, May 28 (AJP) - Naver will pour 1 trillion won ($663 million) into its content creator ecosystem over the next five years, the South Korean internet giant pledged, betting that proprietary data and creator partnerships — not raw model performance — will decide the next phase of the artificial intelligence race. The announced was unveiled at a media round table in central Seoul on Thursday led by Kim Kwang-hyun, Naver's chief data and contents officer, in his first public appearance since taking the role in February. The company, headed by CEO Choi Soo-yeon, said the spending will fund efforts to surface high-quality creators and feed their work into its AI services. "As a CDO, I will build up quality data — the foundation of execution-capable agents — through our creator ecosystem and external partnerships, connect it to AI to deliver differentiated user experiences, and dive more aggressively into the competition," Kim said. As part of the strategy, Naver is launching a fellowship called Naver Mate, which will select about 3,000 top contributors each month from its blog, cafe, Knowledge iN and Premium Content platforms, ranked by how often their work is cited in the company's AI Briefing service. Kim Sang-bum, head of Naver's search platform division, said the company's edge lies in its product-native large language model, a trove of about 10 billion data records, and the operational know-how built up over more than two decades of running its own search ecosystem. A next-generation HyperCLOVA X model will also be deployed shortly, he added. 2026-05-28 11:02:46
Kakao enters second mediation as labor unrest spreads SEOUL, May 27 (AJP) - Labor and management at Kakao entered a second round of mediation at the Gyeonggi National Labor Relations Commission, with the talks widely seen as a make-or-break moment that could push South Korea's dominant messaging platform into its first-ever headquarters strike. The two sides failed to bridge their differences during a first session on May 18, extending the deadline for a resolution, entering the next round Wednesday. Four Kakao affiliates — Kakao Pay, Kakao Enterprise, DKTechin and XLGames — have already secured the legal right to strike after separate mediation efforts collapsed, and strike ballots held at five affiliates were all approved with votes in favor. The central dispute pits the union's demand for a transparent bonus formula against management's insistence on counting 5 million-won annual grants of restricted stock units (RSUs) as part of performance pay — a classification the union flatly rejects. The union is demanding a formula that ties bonuses to a fixed share of annual operating profit, modeled on a landmark agreement at SK hynix. Kakao headquarters has never gone on strike since the company's founding. The prospect of a walkout has already rattled investors: Kakao shares have fallen about 35 percent from levels around 64,000 won at the start of the year, closing at 40,450 won on Wednesday. The standoff at Kakao is unfolding as labor tensions spread across South Korea's corporate landscape. Samsung Electronics' union has been seeking 15 percent of chip-division operating profit, while Hyundai Motor's union opened 2026 wage talks demanding 30 percent of net profit — a wave of collective action signaling growing worker assertiveness at the country's most prominent conglomerates. 2026-05-27 17:25:40
AJP Focus: War-driven metal rally lifts South Korea's battery makers, squeezes carmakers SEOUL, May 27 (AJP) - A war-driven oil shock is reshaping the economics of South Korea's electric vehicle supply chain, lifting prices of lithium, nickel and cobalt to multi-year highs and handing the country's top battery makers a long-awaited tailwind even as carmakers Hyundai Motor and Kia confront fresh cost pressure. Battery-grade lithium traded at US$25.15 per kilogram on May 13, more than triple the $8.10 average of June last year and the highest level since September 2023, according to data from Fastmarkets. Nickel changed hands at $19,017.50 a ton on the London Metal Exchange the same day, up 27.8 percent from December, while cobalt hit $57.83 a pound, the strongest reading since July 2022. The rally reverses a brutal two-year slump in battery metals brought on by an electric-vehicle demand lull and a glut of Chinese supply. It now coincides with two converging forces: surging EV sales in Europe and Asia as drivers flee record-high petrol prices triggered by the Iran war, and a parallel boom in energy-storage demand tied to artificial intelligence data centers. Battery-electric cars accounted for 19.4 percent of the EU market in the first quarter, up from 15.2 percent a year earlier, the European Automobile Manufacturers' Association said. March registrations alone jumped 51 percent on the year to more than 224,000 vehicles across 15 key European markets. Fastmarkets said in its January 2026 battery raw materials update that lithium prices had nearly doubled over the prior two months, driving battery cell costs up by 15 to 20 percent to around $46 to $48 per kilowatt-hour at the start of 2026. Supply has struggled to catch up, with Chinese giant CATL's Jianxiawo lepidolite mine in Jiangxi province idled since last August and Western refiners reluctant to invest. Indonesia and the Democratic Republic of Congo, which together dominate global nickel and cobalt output, have also tightened mining and export quotas. For LG Energy Solution, Samsung SDI and SK On — collectively the only serious non-Chinese force in the global battery market — the timing is fortunate. The three are linked to automakers through pricing contracts that pass raw-material costs through to customers with a lag of about three months, a mechanism that punished earnings during the 2024 to 25 price slide but should now flip into a tailwind. LG Energy Solution said in an April 30 statement that despite increase in shipments of both cylindrical EV and ESS batteries and ongoing cost-reduction efforts, the company posted a quarterly loss, driven by initial ramp-up costs associated with the expansion of ESS production sites. The company added that its ESS business now represents the mid-20 percent range of total revenue, underscoring the pivot from electric-vehicle cells to stationary storage that all three Korean firms are pursuing. "Western governments have little incentive to invest in lithium refining," said Choi Tae-yong, an analyst at DS Investment & Securities. The flip side is darkening for South Korea's carmakers. Batteries account for about 40 percent of the cost of an electric vehicle, and Hyundai Motor Group — which includes Kia — is already navigating fierce Chinese price competition at home and abroad. Hyundai sources roughly 95 percent of parts for its domestically built combustion-engine cars from Korean suppliers, but management is reviewing a broader shift to Chinese components. The group's global parts bill jumped to 84 trillion won last year, up 45 percent from 2021. Chinese batteries already power several South Korean-built models. Hyundai uses CATL cells in the Kona, while Kia equips the Ray, Niro, EV5 and PV5 with batteries from the Chinese supplier. CATL's batteries are about 10 to 20 percent cheaper than those produced here. Domestic market data tell a similar story. About 220,177 EVs were newly registered in Korea last year, with Kia ranking first at 60,609 units, or 27.5 percent of the market, followed by Tesla at 59,893 units and Hyundai at 55,461 units, the Korea Automobile & Mobility Association said. Chinese-made EVs surged 112.4 percent to 74,728 units, capturing a 33.9 percent market share. Whether higher cell prices will be absorbed by automakers or passed on to consumers remains an open question. Battery raw-material costs filtering into retail EV pricing would undercut the industry's long-stated goal of price parity with combustion-engine cars — and could deepen the cost advantage of Chinese rivals built around cheaper lithium iron phosphate, or LFP, chemistries. For now, the war-led surge has handed South Korean battery makers a near-term reprieve after their first simultaneous quarterly loss. For Hyundai and Kia, the road ahead looks rockier. 2026-05-27 15:58:07
South Korea joins OpenAI's trusted cyber access program SEOUL, May 27 (AJP) - South Korea has become one of the first two countries in Asia, together with Japan, to join OpenAI's Trusted Access for Cyber program, securing government-level access to the U.S. firm's most advanced artificial intelligence models for cybersecurity research and defense. The Ministry of Science and ICT announced Wednesday that Vice Minister Ryu Je-myung met OpenAI Chief Strategy Officer Jason Kwon in Seoul on Tuesday to formalize Seoul's participation in the program, which grants vetted governments and institutions-controlled access to OpenAI's frontier models for defensive cyber work. The Korea Internet & Security Agency will serve as the implementing body, the ministry said, adding that the two sides agreed to continue talks on broader applications of AI in cybersecurity. The arrangement is expected to give Seoul a window into how rapidly advancing AI systems could be weaponized, and how to blunt that threat. "Through this cooperation with OpenAI, Korea has laid the groundwork to get ahead of AI-driven cyber threats," Ryu said, pledging to deepen engagement with global AI companies to sharpen the country's defensive capabilities. The two sides also discussed building a working framework between Seoul's AI Safety Institute and OpenAI for joint safety evaluations and research on increasingly capable models. OpenAI said it would actively review the proposal. Separately, the Korean government is exploring participation in Project Glasswing, a rival coalition led by Anthropic that pairs its unreleased Claude Mythos Preview model with about a dozen launch partners — including Amazon, Apple, Google, Microsoft and Nvidia — and some 40 additional organizations to hunt down software vulnerabilities. No Korean entity has yet joined the initiative. 2026-05-27 10:43:49
Anthropic opens Seoul office, names veteran tech executive to lead Korea push SEOUL, May 27 (AJP) - Anthropic, the U.S. artificial intelligence company behind the Claude chatbot, is to officially open a Seoul office and named industry veteran Choi Ki-young as its first country manager for South Korea, deepening its push into one of Asia's most lucrative AI markets. Senior Anthropic executives are scheduled to visit Seoul in the coming weeks to formally inaugurate the office and meet with major enterprise clients, the company said Wednesday. Choi joins from Snowflake, where he served as Korea country manager, and brings more than three decades of experience steering global technology firms in the Asia-Pacific region. He previously led Korean operations for Google Cloud, Adobe, Autodesk and Microsoft. "Korea ranks among the world's most mature AI markets in terms of hardware innovation, developer talent and corporate adoption," Choi said. "Domestic companies combine strong technical capabilities with a genuine commitment to responsible AI, and we are building our Korea business for the long term." The Seoul team is to pursue tailored go-to-market strategies and forge partnerships across enterprises, developers and research institutions. According to Anthropic's Economic Index report published in March, Claude usage in South Korea runs at about 3.5 times the level expected for its population size, with particularly strong adoption in technology and creative sectors. Domestic users already include legal tech startup Law&Company, which has built a Claude-powered legal assistant, and SK Telecom, which has deployed the model in customer service operations. Anthropic enters a Korean market where global rivals have moved quickly. OpenAI launched its Korean subsidiary in May 2025 and formally opened a Seoul office last September, naming former Google Korea chief Kim Kyoung-hoon as country manager — its third Asian base after Tokyo and Singapore. Google has been pushing its Gemini models in Korea through existing Google Cloud and Android channels, including a high-profile partnership with Samsung Electronics that has embedded Gemini in flagship Galaxy devices and the Ballie home robot. The rush reflects South Korea's strategic weight in the global AI value chain. The country dominates high-bandwidth memory chip production through Samsung Electronics and SK hynix — critical inputs for AI training infrastructure — and houses some of the world's heaviest enterprise AI adopters in semiconductors, automotive, shipbuilding and consumer electronics, giving foreign model developers both a supply base and a high-value customer pool to court. 2026-05-27 09:46:32
Korea holds off on IEA oil release, eyeing August crunch SEOUL, May 26 (AJP) - South Korea is holding back on releasing its share of the International Energy Agency's record emergency oil stockpile, opting to preserve the buffer for a potentially graver supply crunch in August as the Strait of Hormuz remains effectively shut. With the June 9 deadline for Seoul's pledged contribution just two weeks away, Yang Ki-wook, director general for industrial resources security at the Ministry of Trade, Industry and Resources, told reporters Tuesday at the Sejong government complex that the country sees little immediate need to tap its reserves. The IEA in March coordinated the largest emergency stock release in its 52-year history, with its 32 member states agreeing to put 400 million barrels on the market to blunt the supply shock from the U.S.-Israel-Iran conflict. South Korea's quota stands at 22.46 million barrels, or about 5.6 percent of the total. Officials are betting that the worst is yet to come. Although recent diplomatic overtures between Washington and Tehran have stirred cautious hopes of a ceasefire, a prolonged closure of the Strait of Hormuz could leave Korean refiners scrambling for crude from August onward, when domestic stockpiles are projected to thin sharply. IEA Executive Director Fatih Birol warned that global oil markets could slip into a "red zone" in July or August as inventories drain and summer travel demand swells, with Middle Eastern barrels still largely absent from the market. "Government stockpiles are a tool for the worst-case scenario, so we believe a release should be considered cautiously, keeping the card in hand for what may come," Yang said, adding that domestic refiners have responded positively to the existing swap arrangement, under which the government lends out reserves against verified overseas purchases. Seoul is also reshaping its supply map. Non-Middle Eastern crude is projected to account for 51.5 percent of imports from May through July, up sharply from 30.9 percent a year earlier — a shift Yang called unprecedented and a strategic imperative for the country's resource security. 2026-05-26 16:53:23
AJP Focus: Asia's energy shock far from over despite Hormuz reopening talks SEOUL, May 26 (AJP) - South Korea and other Asian economies heavily dependent on Gulf energy supplies are bracing for prolonged disruptions even as diplomatic momentum builds toward a potential reopening of the Strait of Hormuz, with analysts warning that supply chains, refining operations and shipping flows could take months to normalize. Iran is expected to allow commercial shipping through the strait about 30 days after a peace agreement with Washington is finalized, Nikkei reported Monday, citing a source familiar with the negotiations. U.S. President Donald Trump said over the weekend that a deal had been "largely negotiated," while Iran's foreign ministry described the arrangement as a memorandum of understanding ahead of broader talks expected within 30 to 60 days. But the situation remains fragile. The diplomatic push intensified after U.S. forces struck missile sites and Islamic Revolutionary Guard Corps vessels in southern Iran on Monday in what Washington described as defensive operations, underscoring the volatility surrounding the conditional ceasefire in place since early April. The Strait of Hormuz has effectively remained closed since March 2. IMF PortWatch data showed only two commercial vessels transited the chokepoint on May 17, compared with a pre-crisis average of roughly 95 ships per day. Brent crude rose 2.43 percent Monday to around $116.73 per barrel, more than 60 percent above prewar levels. For South Korea, where roughly 99 percent of Middle Eastern crude imports normally pass through Hormuz, the gap between a diplomatic breakthrough and a meaningful restoration of energy flows is expected to extend far beyond the tentative 30-day reopening timeline. According to Korea International Trade Association data, South Korea's crude imports fell 22.8 percent on-year in April to about 8.46 million tons, while imports from the Middle East plunged 37.3 percent to 4.49 million tons amid the Hormuz disruption. The Middle East still accounted for the largest share of South Korea's oil imports, but its portion dropped sharply to 53.1 percent from 65.2 percent a year earlier. Imports from Saudi Arabia, Korea's largest supplier, fell 37.6 percent to roughly 2.15 million tons. Iraqi shipments dropped 42.4 percent, while imports from Kuwait nearly collapsed, plunging 98.2 percent. Imports from Qatar were halted entirely. The data underscore how rapidly Asian importers have been forced to redraw supply chains as the Hormuz crisis deepened. The United States, already South Korea's second-largest crude supplier, nearly overtook Saudi Arabia last month. Imports of U.S. crude rose 13.4 percent to about 2.145 million tons, narrowing the gap with Saudi shipments to barely 1,000 tons from more than 1.45 million tons just a month earlier. Seoul has also accelerated diversification toward North America, Oceania and Africa. Imports from Australia surged 89 percent, while Canadian shipments more than tripled. Crude purchases from African producers including Nigeria and Mozambique jumped more than fivefold. North America's share of South Korea's crude imports climbed to 28.3 percent, up 10.3 percentage points from a year earlier. Still, industry analysts caution that reopening the strait would mark only the beginning of a lengthy normalization process. Mine-clearance operations, military escort requirements and a backlog of roughly 1,500 stranded vessels are expected to delay normal shipping flows by another two to three weeks even after transit resumes. "Fully loaded tankers must first pass through, and empty vessels must then enter and drain the stockpiles before oil-producing states can resume output," said Yoon Jae-sung, analyst at Hana Securities. "Given that a voyage to Asia takes four weeks and that 30 to 40 percent of Gulf refining capacity has been damaged — with normalization expected to take at least three months — restoring the supply chain will require considerable time," Yoon said. "Crude oil and gas would take priority, pushing petrochemical products and naphtha further down the queue." Shipping costs have also surged. According to Lloyd's Joint War Committee data, war-risk insurance premiums for very large crude carriers transiting the Gulf have climbed to roughly eight times pre-crisis levels, with single-voyage coverage now costing around $2.5 million per tanker. Six major protection and indemnity insurers, including Gard, Skuld and North Standard, have withdrawn Hormuz transit coverage altogether. South Korean petrochemical firms have partially stabilized operations by increasing naphtha cracking center utilization rates to 85–90 percent of prewar levels through alternative sourcing from Russia, Kazakhstan and the United States. But officials continue warning that liquefied natural gas markets could tighten sharply in the second half as bargaining power shifts back toward suppliers. Compounding concerns, QatarEnergy's force majeure declaration on long-term LNG contracts remains in effect after damage to two production trains at Ras Laffan affected roughly 17 percent of Qatar's LNG exports. Full restoration is expected to take between three and five years. "Unless the war ends on reasonable and viable terms good enough to convince shipowners and insurance companies, it may be extremely difficult for oil prices to return to post-war levels even in the long run," said Chung Tae-hun, associate research fellow at the Korea Energy Economics Institute. "We still face competition for heavy crude supplies outside the Middle East if the conflict becomes entrenched, with China and Japan also aggressively seeking alternative sourcing," Chung added. A diplomatic breakthrough could mark a turning point in the crisis. But for South Korea and much of Asia, the broader energy shock is increasingly shifting from an emergency disruption into a structural adjustment — one likely to leave elevated shipping costs, higher energy premiums and intensified competition for non-Gulf supplies well into 2027. 2026-05-26 15:36:03