U.S. and Israeli strikes on Iran are raising fears of prolonged turmoil in the Middle East, putting South Korean industry on alert as the Strait of Hormuz is shut and risks grow for energy supplies and air and sea logistics. A drawn-out conflict could also weigh on exporters that have been posting a string of trade surpluses. Major groups including Samsung, LG and Hanwha have activated emergency response systems and tightened safety management for employees in the region.
According to the U.K. Maritime Trade Operations (UKMTO) and foreign media reports, Iran’s Islamic Revolutionary Guard Corps on the 2nd blocked the Strait of Hormuz, a route that carries about 20% of global seaborne crude shipments. At least four vessels, including the Palau-flagged tanker Skylight, were attacked near the strait, killing one crew member. The South Korean government said it has not identified any damage involving South Korean oil tankers or LNG carriers.
South Korea imports 70.7% of its crude oil and 20.4% of its liquefied natural gas from the Middle East, and more than 95% of those volumes pass through the strait. The Korea International Trade Association estimated that using alternative routes could raise ocean freight rates by as much as 50% to 80% and extend shipping times by three to five days. It also said insurance premiums for exporters could rise up to sevenfold, adding to inflation pressures.
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 has already halted its Bismayah new town project in Iraq. A surge in global oil prices could also lift costs for petrochemicals, airlines and shipping, potentially hurting first-quarter results.
“Defense and construction have long been key order markets in the Middle East, and if the region becomes a powder keg, there is a high chance that ongoing production and consumption, investment and research and development will be constrained,” an industry official said. The official added that companies are closely watching the situation, including the risk of weaker exports and a global demand slowdown if the war drags on.
South Korea’s financial sector has also moved to an emergency footing. All seven branches operated in the region by the four major banks — KB Kookmin, Shinhan, Hana and Woori — are within the impact zone of the Israel-Iran war. Financial groups said there has been no direct damage so far, but warned that additional fallout would be difficult to avoid if the conflict becomes prolonged, as in the Russia-Ukraine war.
KB Financial Group said it is monitoring exchange rates, interest rates and oil prices in real time under Chairman Yang Jong-hee. 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 financial-market monitoring and steps to ensure the safety of employees working overseas.
Banks also warned that a prolonged downturn across Middle Eastern economies could disrupt cash flow for South Korean companies operating there. They are also concerned that if export channels narrow, delinquency rates could rise. The four major banks’ average delinquency rate on small and midsize enterprise loans in the fourth quarter of last year was 0.45%, already the highest level in nine years. The banks said they will provide 42 trillion won in business stabilization funds, interest-rate reductions and repayment deferrals for companies struggling due to Middle East risks.
* This article has been translated by AI.
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