As military tensions between the U.S. and Iran broaden in the Middle East, South Korean businesses are feeling heightened anxiety about the impact on energy supply and costs. In particular, concerns are rising that protracted conflict could lead to significant increases in energy prices and logistics costs, with wide-reaching consequences for the national economy. Given South Korea's high dependency on energy imports, the adverse effects could be profound if energy prices continue to rise.

Key to this situation is the Strait of Hormuz, which sees over 20% of global sea-borne oil trade. Approximately 70% of South Korea's crude oil imports come from the Middle East, with a significant portion passing through this critical maritime route. Currently, South Korea has a reserve of crude oil sufficient for 208 days, minimizing short-term impacts. However, if the conflict persists, the situation could worsen dramatically; rising oil prices would inflate production costs across energy-intensive sectors such as refining, petrochemicals, shipping, and aviation. Analysts warn that international oil prices, which are currently around $70 per barrel, could surpass $100 if military conflict spreads to major oil-producing countries.

Particularly hard-hit would be the petrochemical industry, which is already undergoing restructuring. Higher production costs due to surging naphtha prices — a key raw material extracted from crude oil — could exacerbate existing challenges. The Ministry of Trade, Industry and Energy has noted that 54% of imported naphtha comes through the Strait of Hormuz. While refining companies might initially experience wider margins as product prices rise faster than crude costs, a prolonged period of high oil prices could lead to decreased demand as economic growth slows. The concerning prospect of rising energy costs could ultimately place significant burdens on the manufacturing sector and lead to spikes in electricity prices and transport costs across South Korea.