South Korean airlines have asked their government to help redirect jet fuel exports to the domestic market, threatening half of Australia’s imports of the critical fuel after Chinese authorities earlier this month flagged export restrictions.
Amid deepening concerns across Asia about the impact of the escalating Middle East conflict, an official at South Korea’s transport ministry told the Guardian that “some domestic carriers” had asked authorities to redirect export-bound jet fuel back to the local market due to supply concerns.
Any move to restrict exports would hit import-dependent countries particularly hard. For instance, Australia sources roughly a quarter of its refined fuel imports from South Korea, including 18% of our total jet fuel imports.
China, which supplies a third of Australia’s jet fuel, has according to reports already moved to restrict fuel exports, although Chris Bowen, the energy minister, late last week said Chinese jet fuel supplies were assured until late April or early May.
Australia relies on foreign jet fuel for about 80% of the roughly 10bn litres burned in a typical year, according to the Australian Institute of Petroleum, suggesting 4bn litres of Chinese and South Korean fuel is now under some level of doubt. South Korea refines imported Middle Eastern crude oil into petroleum products for export, making it one of Asia-Pacific’s key fuel suppliers.
Curtailed international fuel supplies would deliver another blow to Australia’s aviation industry and travellers, with Qantas already having joined several airlines hiking prices to offset soaring costs.
The South Korean transport ministry is attempting to relay the request to the Ministry of Trade, Industry and Resources, which oversees fuel export policy. However, an official at the industry ministry said it had not received any such request and was not currently considering export restrictions.
The request comes as Korean airlines face mounting pressure from surging fuel costs and tightening supply conditions across the region. Vietnam reportedly notified carriers that jet fuel prices would double or triple at local airports. Several budget airlines have cancelled dozens of flights to popular destinations.
Japan has also reportedly notified airlines of possible refuelling restrictions, while the Philippines declared a national energy emergency with President Ferdinand Marcos Jr warning that grounding planes was “a distinct possibility”.
Eastar Jet, a Korean low-cost carrier, plans to cancel 50 flights to Vietnam between early May and the end of the month, while Air Busan and Aero K have already reduced international services from April. Air Premia, a hybrid carrier, is suspending 10 flights on US routes in May.
Asiana Airlines declared emergency management measures on Wednesday, becoming the second Korean carrier after T’way Air to implement crisis measures.
The airlines making the requests to redirect jet fuel have not been identified. Korean Air declined to say whether it had made any requests to the government, referring queries to the transport ministry.
Jeju Air, South Korea’s largest low-cost carrier, did not respond to related questions, but said it was responding to high fuel prices through an “into storage” stockpiling strategy and efficiency measures, including the introduction of Boeing 737 MAX aircraft that use about 20% less fuel than older models.
The South Korean government has capped petroleum prices and limited exports of gasoline, diesel and kerosene since 13 March after US-Israeli strikes on Iran. Naphtha export controls came into effect on Friday.
Jet fuel has so far been excluded from these measures, though South Korea’s role as the world’s largest jet fuel exporter makes any restrictions particularly sensitive for established trade relationships.
South Korea imports virtually all of its crude oil, with roughly 70% transiting the strait of Hormuz before its closure in early March.
The government has imposed sweeping energy conservation measures, including mandatory vehicle use restrictions for public sector workers. It has not indicated whether it would declare a national energy emergency, which would trigger additional crisis measures.
President Lee Jae Myung visited a strategic oil reserve facility on Thursday as part of the government’s response to the fuel crisis.
