South Korea turns to Russian naphtha because of the blockade of the Strait of Hormuz

Iran's closure of the Hormuz Strait in late February 2026 had unexpected consequences for the semiconductor industry. While analysts debated oil price spikes and tanker movements, chip manufacturers in South Korea faced an acute shortage of naphtha—chemical feedstock without which no semiconductor fab operates. Seoul's response proved pragmatic and surprising: Korea began reorienting toward Russian suppliers.

Naphtha and Chips: Hidden Dependency

Most people don't connect naphtha to chip production—and they're wrong. This petrochemical distillate yields ethylene, propylene, and benzene. These substances then transform into polymers, solvents, photoresists, and reagents used at virtually every stage of semiconductor production—from photolithography to final chip packaging.

Samsung, SK Hynix, and other South Korean manufacturers collectively consume millions of tons of such petrochemistry annually, and its shortage is felt faster than any shortage of "exotic" minerals. Before the crisis, roughly two-thirds of naphtha flowing into Asia came through the Hormuz Strait or was produced from Middle Eastern crude. When the corridor became effectively blocked—it handles one-fifth of global oil and gas flows—Asian spot naphtha quotes jumped immediately, and planned petrochemical plant shipments hung in uncertainty.

For South Korea, one of the world's largest naphtha consumers, this became an emergency situation.

Pivot to Russian Feedstock

Korean petrochemical companies—Lotte Chemical, LG Chem, Hanwha TotalEnergies—began urgently restructuring supply chains. Russian naphtha, supplied through Far Eastern ports (Kozmino, Nakhodka) and partially via the Northern Sea Route, proved one of few major sources capable of quickly filling the gap. Spot market transaction volumes with Russian suppliers surged as early as March.

• Russia ranks in the world's top-5 naphtha exporters—volumes allow rapid supply scaling
• Far Eastern routes to Korea span 3–5 days versus 2+ weeks from the Middle East
• Russian naphtha price discount persists—purchase makes economic sense for Korea
• Talks are underway with Kazakhstan and Azerbaijan suppliers in parallel
• Japan and Taiwan are studying similar diversification schemes, creating additional competitive demand

End of Just-in-Time Era

The Hormuz crisis exposed systemic vulnerability the industry preferred not to discuss openly. The semiconductor industry has been built for decades on just-in-time principles: minimal raw material stockpiles, maximally refined logistics, minimized costs. This worked as long as global trade corridors remained stable. One geopolitical force majeure—and the entire logic crumbles within days. Chip makers are now forced to rethink strategic reserves not only of rare earth metals and specialty gases, but also of basic petrochemistry. Insurance premiums for vessels in the Hormuz Strait zone have risen several-fold. Even if the blockade is lifted, carriers will return to familiar routes cautiously—a corridor's safe reputation recovers slowly, and by then companies will already have signed long-term contracts with alternative suppliers.

"We're used to thinking the bottleneck in chip production is a rare mineral or a single plant.

The Hormuz episode showed that a bottleneck can simply be a point on a map."

What This Means

South Korea's transition to Russian naphtha is a pragmatic short-term solution, but behind it lies a longer-term shift: the semiconductor industry is restructuring from cost optimization toward supply chain resilience optimization. The vulnerability of these chains was long a theoretical risk—the Hormuz crisis turned it into a real operational problem that every fab in Asia will now have to solve.