The U.S. and Israeli attacks on Iran are raising the risk of prolonged turmoil in the Middle East, putting South Korean industry on alert. With the Strait of Hormuz now blocked, disruptions to supplies of crude oil and liquefied natural gas, as well as air and sea logistics, have become more likely. A prolonged conflict could also weigh on exporters that have been posting a string of trade surpluses. Major companies including Samsung, LG and Hanwha have activated emergency response systems and are tightening safety management for employees in the region.
According to the U.K. Maritime Trade Operations and foreign media reports, the Islamic Revolutionary Guard Corps on Monday blocked the Strait of Hormuz, which handles about 20% of global seaborne oil shipments. Near the strait, at least four vessels, including the Palau-flagged tanker Skylight, were attacked, and one crew member was killed. The government said it has not identified any damage so far to South Korean oil tankers or LNG carriers.
South Korea imports 70.7% of its crude oil and 20.4% of its LNG from the Middle East, and more than 95% of those shipments pass through the strait. The Korea International Trade Association estimates that using alternative routes could raise ocean freight rates by as much as 50% to 80% and extend transit times by three to five days. It also said insurance premiums for exporters could rise by up to sevenfold, adding to inflationary pressure.
If instability persists, exports of defense products, automobiles and semiconductors could weaken, and multiple Middle East projects pursued by Samsung, Hyundai Motor and Hanwha could be suspended. Hanwha’s construction unit said it is closely monitoring the situation, along with the South Korean Embassy in Iraq and Iraqi military and police, in connection with its Bismayah new city project in Iraq. A surge in global oil prices could also raise costs for petrochemicals, airlines and shipping, potentially hurting first-quarter results.
An industry official said the Middle East is a key market for defense and construction orders, and warned that if the region becomes a powder keg, ongoing production and consumption, investment and research and development could face setbacks. The official said companies are watching closely for an export slowdown and the possibility of weaker global consumption if the war drags on.
The financial sector, which supports companies, has also moved into emergency mode. All seven branches operated by the four major banks — KB Kookmin, Shinhan, Hana and Woori — in the Middle East are within the impact zone of the Israel-Iran war. Financial holding groups said there has been no direct damage so far, but warned that additional losses could be unavoidable if the conflict becomes prolonged, as in the Russia-Ukraine war.
KB Financial Group, led by Chairman Yang Jong-hee, is checking exchange rates, interest rates and oil prices in real time. Shinhan Financial Group convened its group crisis management council to review its response system amid rising volatility in financial indicators. Hana Bank set up a rapid response team for the Iran situation. Woori Financial Group ordered an urgent review across affiliates, including stronger monitoring of financial markets and steps to ensure the safety of employees working overseas.
If a prolonged war weakens the broader Middle East economy, cash flow at South Korean companies operating there could also deteriorate. Banks are also concerned that if exporters face disruptions, delinquency rates could rise. The average delinquency rate on small and midsize business loans at the four major banks in the fourth quarter of last year was 0.45%, already the highest level in nine years. The four banks said they will provide 42 trillion won in management-stabilization funding, interest-rate reductions and deferred installment repayments for companies struggling due to Middle East risks.
* This article has been translated by AI.
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