Hormuz disruption feared to hurt Korean economy

A map showing the Strait of Hormuz and Iran is seen behind a 3D printed oil pipeline in this photo taken June 22, 2025. Reuters-Yonhap

Concerns are mounting that the Korean economy could take a hit from disruptions to oil and gas shipments through the Strait of Hormuz, following U.S. and Israeli military strikes on Iran that began Saturday and killed Iranian Supreme Leader Ayatollah Ali Khamenei.

James Kim, director of the Korea program at the U.S. think tank Stimson Center, warned that the conflict in the Middle East could hurt Korea’s energy supply, given the country’s dependence on the region for 70 percent of its crude oil imports and 30 percent of its natural gas supply.

"As long as the conflict does not have a prolonged impact on the movement of cargo across the Strait of Hormuz, South Korea will manage," Kim said Saturday.

"But if the conflict drags on for a prolonged period with the Strait of Hormuz being inaccessible to international shipping, there is likely to be a noticeable impact on South Korea's ability to not only keep its lights on but also manufacture and export products as part of the global supply chain."

The Korea International Trade Association also warned of a possible spike in shipping costs for cargo from the Middle East.

"Alternative routes via major Omani ports are possible, but 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," the association said after an emergency meeting on the Iranian crisis Sunday.

"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."

J.P. Morgan and other global investment banks have not ruled out the possibility of international oil prices exceeding $120 per barrel — a scenario weighing on Korea’s petrochemical, aviation and shipping industries.

As of Monday afternoon, however, both West Texas Intermediate and Brent crude were trading below $80 per barrel.

Gas and diesel prices are displayed at a gas station in Seoul, Monday. Yonhap

Expecting the conflict to end within three months at the latest, Daishin Securities analyst Choi Jin-young advised investors to refrain from betting on rapid oil price hikes.

"Iran is expected to remain reluctant to block the Strait of Hormuz completely, due to its need to generate revenues from the sale of petroleum," he said.

The government also downplayed concerns about energy shortages, citing reserves of oil and gas sufficient to last several months in the event of supply interruptions.

"If the situation is prolonged, we will supply oil reserves from nine stockpiling facilities to the domestic market," the Ministry of Trade, Industry and Resources said.

According to the ministry, the Strait of Hormuz remained open as of Monday afternoon, though warnings from Iran’s Islamic Revolutionary Guard Corps prompted Korean vessels to either wait in nearby waters or seek alternative routes.

On Sunday, an HMM container ship passed through the strait without incident.