As the Middle East war extends beyond a month, analyses are mounting that South Korea's economy — despite being outside the war zone — is absorbing the heaviest blow. The country's energy and raw material import structure, combined with its manufacturing-driven economic makeup, has led to assessments that Korea is "the most affected non-combatant nation."
"Korea Hit Hardest Among Non-Combatants"… Supply Chains Take Direct Hit
The Center for Strategic and International Studies (CSIS), a U.S. foreign policy and security think tank, stated in a recent report titled "The Impact of the Iran Conflict on South Korea: A Data-Driven Analysis" that "no non-belligerent country has suffered a greater blow than South Korea since the Iran conflict began."
The core cause is the Strait of Hormuz. Approximately 70% of Korea's crude oil imports pass through the strait, and its effective blockade immediately destabilized the country's energy supply chain.
"South Korea has high Hormuz dependency not only for crude oil but also for a range of critical resources," CSIS said in the report. "Over the next two to six months, upward price pressure will spread across transportation, logistics, petrochemicals, agriculture and food and beverages."
The damage is evident in the numbers. The Times of London reported on the 5th (local time) that Korea's petroleum product supply decline was the steepest among major countries. Gasoline supply fell 86% and diesel 72%, far exceeding the major-country averages of 12% and 20%, respectively.
Raw material disruptions are also severe. Korea depends on Qatar for 64.7% of the helium essential to semiconductor manufacturing processes. Iranian strikes halted production at Qatar's Ras Laffan Industrial City, turning supply disruptions into reality. Helium prices have already surged more than 40%.
