Korea, Japan Join Hands on Energy Supply Chain Security

Korea, the United States, Japan, Australia, and 14 other major Indo-Pacific nations held the first "Energy Security Ministerial Meeting and Business Forum" in Tokyo on May 14-15, issuing a joint statement on energy cooperation. The statement declared, "We have agreed to cooperate in expanding stable energy supply in light of the Middle East situation," citing power grid protection, infrastructure investment, supply source diversification, and long-term energy contracts as implementation measures. Notably, Korea and Japan established a minister-level "Industrial and Trade Policy Dialogue" channel and signed a "Supply Chain Partnership Agreement (SCPA)" to address energy crises. The two nations also agreed on joint exploration and investment in critical minerals, liquefied natural gas (LNG) swaps, and supply chain support.

The alignment of major Indo-Pacific nations and the Korea-Japan partnership on energy supply chain stability demonstrates that energy supply disruptions have reached dangerous levels due to the Middle East crisis. The fallout from the Iran conflict has sent not only crude oil but also raw material prices surging, delivering shocks to domestic manufacturing. Korean semiconductor companies import 90% of helium—a critical gas—from Qatar. While Qatar accounts for 30% of global helium production, Iranian attacks on production facilities have disrupted supply. It is only a matter of time before Korean companies feel the impact. Urea prices, a fertilizer feedstock, have surged 35% since U.S. airstrikes on Iran, while ethanol prices have jumped more than 10%. Aluminum prices have risen over 8% this month alone, hitting a four-year high. Supply anxiety is so severe that companies are pleading, "We can barely survive a month with some industrial materials."

This is an era where energy and resources determine national competitiveness. If U.S.-China supply chain decoupling is followed by prolonged geopolitical instability in the Middle East, Korea—a resource-poor nation—will suffer the greatest impact. The government must approach this with a sense of crisis, recognizing that energy and raw material supply disruptions and price spikes could shake the foundations of manufacturing, and wage an all-out effort to secure alternative supply chains. The Iran situation should serve as an impetus to accelerate diversification of energy import sources, targeting not only Altasia (alternative Asian supply chains to replace China) but also Latin America, Central Asia, and African nations. Strategies linking Official Development Assistance (ODA) and financial support packages with energy cooperation agreements with these countries also merit consideration.