Counting the cost: Middle East conflict reshaping Korea’s energy and trade landscape

The escalation of military conflict involving the United States, Israel and Iran has sent shockwaves well beyond the Middle East. For Korea — one of Asia’s most trade-dependent, energy-hungry economies — the implications may be immediate, structural and far-reaching. From crude oil prices to export controls, Korea faces the prospect of a new era of heightened volatility. One source of vulnerability lies in a basic structural reality: The country imports more than 80 percent of the energy it consumes, with around 70 percent of its crude oil and 20 percent of its liquified natural gas (LNG) imports sourced from the Middle East. When the Strait of Hormuz faces disruption, Korea — the world’s fourth-largest oil importer — is likely to feel it acutely. The initial market reaction has been swift and pronounced. Korea’s leading stock index lost more than 12 percent in early March, with trading temporarily suspended, while the won weakened against the dollar as energy market fears rippled through financial markets. For refiners, petrochemical producers and heavy manufacturers, th

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