KITA warns of logistics risks if Strait of Hormuz blocked

An aerial view of the Iranian shores and the island of Qeshm in the Strait of Hormuz, December 10, 2023. Reuters-Yonhap

Korea could face serious uncertainty in its export and import logistics if Iran blocks the strategic Strait of Hormuz, the Korea International Trade Association (KITA) said Sunday.

KITA held an emergency meeting at its Trade Tower headquarters, presided over by Chairman Yoon Jin-sik, to review potential risks amid escalating U.S.-Iran tensions and discuss contingency measures.

The Strait of Hormuz, a narrow waterway linking the Persian Gulf and the Gulf of Oman, is a vital route for global oil. About 27 percent of the world’s seaborne oil passes through its 55-kilometer width, with tankers able to navigate only a 10-kilometer channel within Iranian waters. Following the joint U.S.-Israeli military operation, Iran’s Revolutionary Guard warned that no ships would be allowed to transit the waterway.

Korea imports 70.7 percent of its crude oil and 20.4 percent of its liquefied natural gas (LNG) from the Middle East, making energy supplies highly vulnerable to any blockade. KITA noted that while alternative routes via major Omani ports are possible, their practical feasibility is uncertain, particularly amid the risk of wider conflict as Iran’s missile strikes target U.S. bases in Saudi Arabia, the United Arab Emirates and Bahrain.

Shipping costs on rerouted paths could rise 50 percent to 80 percent, while overland transport and customs procedures could extend transit times by three to five days. Past incidents in the region have also seen insurance premiums surge up to sevenfold.

The Suez Canal is another variable. Since late 2023, when the Houthi insurgency led some shipping companies to bypass the canal via the Cape of Good Hope, traffic has fallen sharply, limiting the potential for additional disruptions, KITA said.

Despite these risks, KITA said Korea’s exports are expected to face only limited short-term fallout even if international crude prices rise 10 percent following the military operation.

A 10 percent increase in crude prices would reduce overall exports by just 0.39 percent, as higher export prices are largely offset by weaker demand. Based on monthly data from 2000 through 2025, a 10 percent oil price gain would raise export unit values by 2.09 percent, while shipment volumes would drop 2.48 percent, resulting in a slight net decrease in total export value.

Imports, however, would be more affected. A 10 percent rise in oil prices would push import prices up 3.15 percent, while volumes would fall 0.46 percent, increasing total import value by 2.68 percent, reflecting Korea’s heavy reliance on energy imports. Corporate production costs would also rise 0.38 percent, with manufacturing costs climbing 0.68 percent and services-sector costs increasing 0.16 percent.

To prepare, KITA said it will provide targeted guidance to small and medium-sized exporters most vulnerable to a Strait closure, including detailed information on transshipment and inland transport via Omani ports such as Salalah and Duqm.

The association also plans to strengthen coordination and information-sharing with domestic logistics firms to provide timely updates and explore measures to ease additional costs associated with rerouting.

Chairman Yoon urged KITA staff to maintain continuous monitoring of export and import logistics and implement measures aimed at minimizing potential industry damage.