By Kim Hyun-cheol
Staff Reporter
As global oil prices rise, worries are surfacing that the Korean economy could be hit hard in the second half of the year.
The price of benchmark Dubai crude reached $71.72 per barrel in international markets Thursday, double the $36.45 at the end of last year, according to data from the Korea National Oil Corp. (KNOC).
This year shows a steeper rising curve. Last year, Dubai crude rose to a record-high $140.70 in July, up from $89.30 at the end of 2007.
A recent report from the Korea Energy Economics Institute (KEEI) said it could reach $80 per barrel in the fourth quarter.
``Oil prices could even be over $90 in the first half of the next year, if the U.S. economy hits the bottom earlier than expected in the end of the third quarter,'' KEEI research fellow Lee Moon-bae said.
The rise is expected to play a negative role in the overall Korean economy by bringing down the country's trade surplus.
Until July, Korea has posted $26.2 billion in accumulated surplus, which was due to oil prices, ranging $40 to $60 per barrel, among other factors.
Experts note that the surplus is likely to fall if oil prices reach more than $90 per barrel. The country's trade structure is highly dependent on prices of oil and other commodities.
A recent report from the Samsung Economic Research Institute said the steep rise in prices was one of the biggest factors dragging down the national economy in the second half of the year.
High oil prices could hurt corporate profitability and expand insolvency overall, consequently slowing down the fast revival of the Korean economy, the report said.
The negative effect could gather momentum if it is combined with a stabilizing won-dollar exchange rate. It is widely predicted the exchange rate will be down to 1,050 to 1,200 in the fourth quarter this year, from 1,259.5 at the end of last year.
Consumer prices could be also affected, as they are often influenced by oil price changes.
According to Opinet, a KNOC-run, real-time Web site, gasoline prices at gas pumps averaged 1,633 won ($1.33) in the first week of August, up 12.7 won from the previous week.