The Korea Trade Association has raised alarms about potential increases in oil prices if military conflict breaks out between the U.S. and Iran or if the Strait of Hormuz is blocked. While the immediate impact on South Korea's exports is limited, the blocking of this crucial maritime route could lead to long-term shocks in oil prices due to disrupted supplies from major oil-producing regions. The association notes that about 20% of global maritime crude oil traffic passes through Hormuz, making its security vital for global energy markets.

Highlighting the strategic importance of the strait, the association pointed out that only a narrow corridor of approximately 10 kilometers is available for oil tankers, all of which lies within Iranian territorial waters. Consequently, any act of increased Iranian naval scrutiny could effectively create a blockade. Reports have emerged indicating that the Iranian Revolutionary Guard Corps has communicated a ban on vessel traffic through the strait, reigniting concerns about escalating military tensions.

Despite a slight price increase in international oil markets following the renewed tensions since mid-September, the impact has been mitigated by other geopolitical factors, such as the ongoing Ukraine conflict and long-standing disputes in the Middle East, which have lessened the perceived risk premium on oil prices. Nevertheless, the Trade Association anticipates a 0.39% decline in South Korea's exports and a 0.38% rise in production costs for industries, should oil prices increase by 10%. With South Korea relying on the Middle East for over 70% of its crude oil imports, effective monitoring and risk management strategies are essential moving forward.