South Korea Bans Naphtha Exports Amid Middle East Supply Crisis

The South Korean government implemented a five-month total ban on naphtha exports starting March 27, 2026, to combat severe supply shortages. The crisis followed military actions by the United States and Israel against Iran, which effectively closed the Strait of Hormuz, a route used for approximately half of South Korea's naphtha imports.

To stabilize the domestic market, the government designated naphtha as a strategic commodity for economic security. The ban requires refiners to divert the 11 percent of domestically produced naphtha typically exported back to local buyers, prioritizing healthcare, core industries, and essential consumer goods. Only specific types of heavy naphtha not used locally may be exported via special ministerial waivers.

Industry impacts were immediate, with Yeochun NCC declaring force majeure on certain products and LG Chem Ltd. temporarily shutting down a naphtha cracker due to feedstock deficiencies. In response, the government expanded low-interest loans via a supply chain fund and introduced a ban on hoarding urea and urea solution. To further mitigate the shortage, officials are discussing the resumption of Russian crude oil and naphtha imports, which had been halted since 2022.

Government officials are now considering extending export controls to other petrochemical products, including ethylene and synthetic resin, to prevent broader industrial disruptions.