In September 2025, RAND convened industry leaders and security experts in Seoul for a policy game under the theme “Geopolitics of Energy in the Korean Peninsula.” The exercise simulated a scenario in which, by 2028, tensions around Taiwan escalate to the point that the Taiwan Strait and the South China Sea are blockaded, triggering an energy crisis and supply chain disruptions for South Korea. Through multiple rounds of simulation, participants examined how such a crisis could reverberate across the political, economic, and security domains.
The concept of a policy game remains relatively new in Korea. It evolved from RAND's long-standing tabletop exercises (TTX), strategic simulations developed over six decades for the U.S. government and military. Originally focused on military contingencies, these exercises have expanded into the economic and technological spheres as the definition of security itself has broadened. Participants role-play as different institutions, exploring how to respond to complex crises such as global semiconductor supply disruptions or AI-driven cyberattacks. The goal is to raise awareness of unforeseen variables and strengthen policy readiness.
RAND's choice of Korea as the first country for an energy security policy game was strategic. Korea sits at a geopolitical crossroads yet depends on imports for 90 to 95 percent of its energy—a structural vulnerability. Its core industries—semiconductors, heavy manufacturing, and petrochemicals—cannot function without stable energy supplies. The scenario's timing, September 2028, reflected the assumption that tensions in the Taiwan Strait could peak following Taiwan's presidential election earlier that year.
Korea sits at a geopolitical crossroads yet depends on imports for 90 to 95 percent of its energy—a structural vulnerability.
During the exercise, participants recognized that a blockade of the Taiwan Strait and South China Sea could coincide with AI-based cyberattacks on liquefied natural gas terminals, refineries, and communication networks. Highly digitalized and interconnected, Korea would face a multi-layered crisis in which rapid decisions on energy rationing, alliance coordination, and network management could determine its economic and strategic stability. The simulation underscored that diversifying energy supply routes, maritime logistics, and data systems is no longer optional—it is a strategic necessity. Above all, the Taiwan Strait scenario highlighted that Korea's energy security cannot be separated from regional geopolitical stability.
The recent blockade of the Strait of Hormuz starkly exposed these vulnerabilities. Triggered by the Iran war in late February, the closure has dealt a severe blow to the Korean economy, which relies on that route for about 95 percent of its crude oil imports. The disruption of Middle Eastern energy flows has sharply increased production and logistics costs, weakened export competitiveness, and even shaken defense manufacturing readiness. The strategic and economic costs of Korea's heavy dependence on the Middle East have become painfully clear, underscoring the need for long-term diversification of energy sources.
The Hormuz crisis should serve as a wake-up call to prepare for potential disruptions in the Taiwan Strait. Although 70 to 80 percent of Korea's refining infrastructure is optimized for Middle Eastern heavy crude, structural change is unavoidable. Seoul should gradually expand the share of light crude from the United States and other stable suppliers such as Australia and West Africa, while linking parts of its defense and high-tech manufacturing to light crude oil supply chains. Broader cooperation on technology transfer and investment—whether with the United States, Europe, or emerging energy producers—will also be essential to secure alternative sources for key materials such as helium and naphtha.
Most importantly, the recent crisis underscores the urgency of diversifying into non-fossil energy sources. The trilateral U.S.–Korea–Japan agreement signed in February 2024 on small modular reactors and advanced nuclear technologies should be leveraged to reduce dependence on the Gulf region and strengthen energy resilience across the Indo-Pacific.
Korea's energy security is no longer merely an economic issue. The turbulence in the Taiwan Strait and the Strait of Hormuz sends a clear message: Unless Korea fundamentally restructures its energy architecture, it will remain perilously exposed to external shocks. The time for strategic transformation is now.
