Korea Institute for International Economic Policy (KIEP) analyzed that "in the worst-case scenario of the Middle East crisis escalating, international oil prices will rise to $174 per Barrel in the fourth quarter of next year." International oil prices have moved from $60–$70 before the Middle East crisis to around $100–$110 recently.
KIEP stated accordingly in a report released on the 2nd, "Spillover effects on major countries from an oil price shock due to a U.S.-Iran war."
KIEP divided the Middle East crisis into three scenarios—early end to the war/truce; Hormuz blockade/prolonged conflict; attacks on energy facilities/escalation—and projected international oil prices. In all three scenarios, prices did not return to the prewar level of $63 per Barrel.
The analysis found that even if the war ends early or a truce is reached, oil prices will reach $90 per Barrel in the fourth quarter of next year. It cited continued price increases as restoration of damaged energy facilities is delayed and demand surges to secure strategic reserves.
If the Hormuz blockade and conflict are prolonged, prices are expected to rise to $117 per Barrel in the fourth quarter of next year. In the worst-case scenario, where energy facilities continue to be destroyed and the conflict escalates, prices are expected to soar to $174 per Barrel.
KIEP said, "If a prolonged blockade of the Strait of Hormuz keeps prices at $100–$117 per Barrel, Korea's energy import expense will increase significantly and could weigh on the current account."