Japan’s earthquake will likely exert upward pressure on energy prices over the short term as the disaster, along with unrest in Arab countries, increases market volatility, the finance minister said Wednesday.

“The massive earthquake in Japan is expected to disrupt supply and demand of major energy resources over the short haul, possibly causing price fluctuations,” Finance Minister Yoon Jeung-hyun said at a policy coordination meeting.

His remarks come as uncertainty deepens as Japan, the world’s third-largest economy, is still reeling from the fallout of the 9.0-magnitude quake and ensuing tsunami, which devastated the northeastern part of the island country.

The quake adds to uncertainty in the energy market amid ongoing unrest in oil-rich Middle East and North African countries. Fears over radioactivity leakage from one of Japan’s hard-hit nuclear power plants have also increased anxiety.

Korea, the world’s fifth-largest crude buyer, relies almost entirely on imports for its oil needs.

Despite renewed concerns over the safety of nuclear power in Japan, Yoon said Korea needs to make a careful approach to nuclear power, cautioning against a short-term response in pushing for its energy policy.

“In the mid and long term, Japan’s earthquake could deepen controversy over our national strategy to build nuclear reactors, which have emerged as a new energy source,” Yoon said.

“However, securing energy, including nuclear power, is the foundation of our future strategies,” he added. “The government should avoid taking a short-term approach. Instead, it has to consider diverse aspects of building nuclear power plants by considering their construction costs, efficiency, energy supply situations and climate change.”

Bank of Korea Gov. Kim Choong-soo said in a monthly meeting with economists oil prices are not likely to jump to a level seen in 2008 despite concerns over ongoing political upheaval in the Middle East and North Africa.

Korean imports of crude oil soared 62 percent in the first 20 days of March from a year earlier on increased international prices, the customs office said Tuesday.

The country imported crude oil worth $5.6 billion during the cited period, according to the Korea Customs Service.

The price for Dubai crude, Korea’s benchmark, has recently hovered around $110 per barrel, up roughly 20 percent from the end of last year, due to geopolitical risks in the Middle East and rising demand.

Resource-poor Korea relies almost entirely on imports for its oil needs, with 82 percent being imported from the Middle East.

Soaring oil prices also come as the Korean economy is feared to face accelerating inflation. The country’s consumer prices jumped 4.5 percent on-year in February, the steepest hike in 27 months.

The Korean government is seeking to contain consumer inflation at around 3 percent this year while targeting 5 percent economic growth. The country’s central bank put its 2011 inflation projection at 3.5 percent.

Meanwhile, the country posted a trade deficit of $2.46 billion in the first 20 days of this month due to surging oil prices, widening from a deficit of $1.73 billion a year earlier, according to the office.

Exports reached $25.89 billion in the first 20 days of this month, up 19 percent from a year earlier, with imports surging 22.3 percent to $28.35 billion over the cited period, it said.

(From news reports)