With the heightened tensions in the Middle East due to the U.S. airstrikes on Iranian nuclear facilities, uncertainty is rising across the Korean economy. As geopolitical risks grow, international oil prices and the won-dollar exchange rate are increasing, raising concerns about inflation, the deterioration of corporations' revenue, and shocks to financial markets.
On the 22nd (local time), Bloomberg reported that "the possibility of international oil prices soaring has increased following U.S. President Donald Trump's airstrikes on Iran," analyzing that the overheating of the crude oil options market, rising shipping costs, and increased diesel prices, along with significant fluctuations in the crude oil futures market, could persist for some time.
Saul Kabonik, a senior analyst at research firm MST Marquee, pointed out that Iran could respond with tough measures, such as blocking the Strait of Hormuz or targeting oil facilities in the Gulf region, as a result of this airstrike. He predicted to Bloomberg, "If Iran acts as it has actually warned, international oil prices could soar to $100 per barrel." Joe Delahure, a strategist at Rabobank, also raised the possibility of oil prices climbing to the $80 to $90 range.
In fact, following the escalation of the conflict between Iran and Israel, international oil prices have steadily been on the rise. As of the 13th, the futures price of West Texas Intermediate (WTI) crude oil, which was $74.23 per barrel, increased to $76.84 on the 20th, while Brent crude also surpassed $77. The price of gasoline in Seoul has also risen, exceeding 1,721 won.
If oil prices continue to rise due to international geopolitical instability, there is a high possibility that the Korean economy will take a direct hit. In a structure heavily reliant on foreign energy, rising oil prices can lead to increases in logistics costs and raw material prices, consequently pushing up overall import prices. This could stimulate an increase in consumer prices and amplify inflationary pressures.
As geopolitical uncertainties grow, the won-dollar exchange rate may also show unstable trends. When global tensions escalate, the preference for safe assets strengthens, leading to an increase in the value of the dollar, which in turn results in the depreciation of the won and further raises import costs. This overlapping inflationary pressure can increase burdens for both corporations and consumers.
Moreover, instability in the Middle East may lead to supply chain disruptions and deteriorating export conditions. Corporations' revenue may shrink, and with the slowdown in consumer sentiment and outflows of foreign investors, the domestic financial market may also heighten in instability.