Israel's airstrikes on Iran have raised concerns that crude oil prices could surge, given the Middle East's significant share of global production. If the United States and Israel directly target Iran's oil facilities amid continued military conflict, international oil prices could soar from the current $70 per barrel range to over $100, analysts warn. The short-term impact on South Korean exports is expected to be limited. While global capital is expected to shift toward safe-haven assets such as gold and silver, Bitcoin also briefly plunged more than 3%.
CSIS: Prices Could Jump from $73 to $100 per Barrel
OPEC+ expects oil prices to rise following the Israeli and U.S. attacks on Iran, Bloomberg reported on the 28th. The group is also considering increasing supply to prevent a sharp price spike. OPEC+, the coalition of major oil-producing nations led by Saudi Arabia and Russia, has frozen crude supply levels for the past three months but is expected to increase output starting in April.
On the 27th, the day before the strikes, crude closed at $73 per barrel on the London exchange—a seven-month high—amid escalating tensions between the U.S., Israel, and Iran. Markets have since been closed for the weekend.
The conflict has not immediately disrupted oil supplies from Iran or the Middle East. However, if military hostilities escalate to a worst-case scenario, a sharp rise in oil prices appears inevitable. According to scenarios outlined by the Center for Strategic and International Studies (CSIS) on the 18th, oil prices could surge above $90 per barrel if the Strait of Hormuz—which handles 20% of global seaborne crude shipments—is blocked. Prices could exceed $100 per barrel if the U.S. directly strikes Iranian oil facilities.
As of 8:30 p.m. on the 28th, tanker traffic through the Strait of Hormuz remains unobstructed, according to Bloomberg.
Trade Association: Global Demand Slowdown a Greater Concern Than Oil Prices
The Korea International Trade Association (KITA) estimates that a 10% increase in international oil prices would raise export unit prices by 2.09%, but export volumes would decline by 2.48%, limiting the overall drop in export value to approximately 0.39%. KITA noted that export volume declines due to weakening global demand would outweigh the impact of higher oil prices.
KITA analyzed that geopolitical risks are having a somewhat smaller impact on oil prices compared to the past, given the prolonged Russia-Ukraine war and recurring conflicts in the Middle East. South Korea's low export exposure to Israel (0.3%) and Iran (0.02%) is also limiting the shock.
"In the short term, the impact on exports is limited," KITA said. "In the medium term, the resilience of the global economy and trade demand is expected to have a greater influence on the recovery of export volumes and prices."
Kim Jeong-kwan, Minister of Trade, Industry and Energy, chaired the first emergency situation review meeting at 7 p.m. with relevant ministry departments and agencies to assess the supply and demand of resources including oil and gas, as well as the impact on domestic industries.
The emergency review found no unusual developments in tanker and LNG carrier operations to date. However, some tankers are approaching passage through the Strait of Hormuz, requiring close monitoring and securing of alternative routes.
Meanwhile, prices of safe-haven assets such as gold and silver are also expected to rise. During periods of heightened political and economic instability caused by events such as wars, global capital tends to flow toward safe-haven assets.
Bitcoin prices have been declining. As of 8:39 p.m. on the 28th, Bitcoin was trading at $64,199, down 2.54% from 24 hours earlier. After news of the Iran strikes broke, the price briefly fell more than 3% to $63,198 before gradually recovering.