Easing Supply Risks Prompt S. Korea to Lower Crude Oil Energy Security Alert

The government plans to lower the resource security crisis warning for crude oil by a notch to Level 2, the vice industry minister said on Tuesday, following the stabilisation of global oil prices amid progress in peace talks between the United States and Iran.

Vice Industry Minister Moon Shin-hak made the remark during a Cabinet meeting held at the presidential office, adding the alert for natural gas will be fully lifted as well, reports Yonhap news agency.

South Korea operates a four-tier national resource security crisis warning system based on the severity of supply disruptions and their impact on the national economy.

The government first issued the lowest alert for crude oil in early March, which was raised to Level 2 later that month and eventually to Level 3 in April. South Korea has also maintained a Level 2 alert for natural gas since April.

Moon said more crude oil is being imported via routes that bypass the Strait of Hormuz, with the country also securing imports from regions beyond the Middle East, including the U.S.

Consequently, the government will also fully lift the vehicle rotation system, scrapping its original plan to ease the odd-even rule to a five-day rotation.

Meanwhile, South Korean stocks traded slightly higher late on Tuesday morning, tracking overnight gains on Wall Street as easing tensions in the Middle East boosted investor appetite.

The benchmark Korea Composite Stock Price Index (KOSPI) gained 8.97 points, or 0.11 percent, to 8,403.62 as of 11:20 a.m., after opening 0.68 percent higher.

Investor sentiment improved after the United States and Iran were set to resume talks in Qatar aimed at easing tensions in the Strait of Hormuz, alleviating concerns over a prolonged disruption to global oil supplies.

Overnight, Wall Street rebounded sharply as investors returned to tech stocks.

The Dow Jones Industrial Average gained 0.59 percent to close at a record high, while the Nasdaq composite jumped 2.07 percent and the S&P 500 advanced 1.18 percent.

Crude prices rose modestly as investors monitored implementation of the U.S.-Iran peace framework.