Iran's declaration to block the Strait of Hormuz, the world's "energy artery," following U.S. and Israeli airstrikes is raising concerns of major disruptions across logistics and energy industries. Korean shipping, refining, and aviation companies have convened emergency meetings to coordinate urgent responses.
According to Reuters, AFP and other international news agencies on the 1st, Iran's Islamic Revolutionary Guard Corps (IRGC) blocked vessel transit on the 28th of last month (local time), declaring passage through the Strait of Hormuz unsafe. The European Union Naval Force notably received radio communication from the Revolutionary Guard stating vessels "cannot pass through the Strait of Hormuz." The strait is a critical shipping route handling approximately 20-30% of global oil traffic. Korea imported 69.1% of its crude oil from the Middle East last year, with more than 95% of that volume transiting through the Strait of Hormuz.
Refiners Seek Alternative Routes; Prolonged Crisis Could Disrupt Supply
Major refiners simultaneously held emergency meetings on the 1st to assess the situation and discuss countermeasures. Disruptions to Hormuz Strait shipping could trigger a surge in crude oil prices amid persistently high exchange rates. Brent crude has already climbed to approximately $70 per barrel as Middle East tensions escalated recently, reaching its highest level since August last year.
Refiners are prioritizing safety checks on tankers in transit while considering diversifying crude oil sources beyond the Middle East. However, immediate impacts from a Hormuz blockade are expected to be limited since public and private sectors have secured approximately seven months of strategic petroleum reserves. A prolonged crisis could increase cost burdens across transportation and industry, and more critically, a global economic slowdown could reduce demand for petroleum products.
Shipping Industry Unlikely to Get Convoy Support; Rerouting Would Spike Costs
The shipping industry operating vessels through the Strait of Hormuz is also on high alert. The strait is an essential route for Korean shipping companies focused on tankers and bulk carriers, including SK Shipping and Pan Ocean.
During past Middle East crises, U.S. and British coalition forces operated convoys to escort vessels through the strait. Industry observers believe this option is unlikely given U.S. involvement in the current conflict. Foreign shipping companies transiting the waterway are already returning to port, stopping, or rerouting.
Korean companies are reviewing contingency plans with the Korea Shipowners' Association and preparing for potential escalation. Shipping companies face concerns over rising freight rates from route diversions, along with surging international oil prices and insurance costs.
Korean Air Cancels Middle East Flights; Operating Costs Expected to Rise
Airlines are diverting and canceling flights due to airspace closures. Korean Air, the only domestic carrier operating Middle East routes with seven weekly round trips between Incheon and Dubai, diverted flight KE951 (B787-9) bound for Dubai International Airport from Myanmar airspace back to Incheon on the afternoon of the 28th. The return flight KE952, scheduled to depart Dubai for Incheon at 9 p.m., was subsequently canceled.
Korean Air plans to monitor the situation and adjust subsequent schedules accordingly. The airline will provide flight information through its website and other channels, as Dubai route operations may be disrupted depending on local developments.
Rising fuel prices pose the greatest concern for the aviation industry. Jet fuel represents a substantial portion of airline operating costs, and increases cannot be fully offset by fuel surcharge adjustments, directly impacting operating profits. A Hormuz Strait blockade or damage to major oil facilities could significantly increase burdens on the aviation industry through surging international oil prices. Potential exchange rate increases from U.S.-Iran tensions also raise concerns, as airlines pay major fixed costs including fuel, aircraft lease payments, maintenance, and overseas crew expenses in dollars.
Growing uncertainty across related industries has the government closely monitoring the crisis's economic impact. The Presidential Office's National Security Office convened an emergency NSC working-level coordination meeting the previous day to assess the situation in Iran and the Middle East. "We evaluated the impact of the current situation on our national security and economy, and reviewed measures and future plans by relevant ministries," the National Security Office stated. "We will remain vigilant and prepare for future developments, keeping in mind the possibility of a prolonged crisis."