Rising Tensions in Hormuz Strait Raise Concerns Over Oil Prices and Logistics

The fire on the South Korean vessel Namuhho, confirmed to be the result of an external attack, has heightened concerns over risks originating from the Middle East. If tensions in the Hormuz Strait persist, there are fears that the costs of crude oil imports, as well as logistics, exports, and manufacturing, could increase significantly.

According to Yonhap News on May 10, the Ministry of Foreign Affairs announced that the fire on the Namuhho, which occurred in the Hormuz Strait on May 4, was caused by an unidentified flying object. However, it remains unclear whether the object was a drone or a missile, and the identity of the attacker has not been determined.

The Hormuz Strait, through which 20-30% of the world's oil trade passes, has been under blockade for over two months since March, leading to rising costs for domestic crude oil procurement.

The fire on the Namuhho has cast doubt on the prospects for resuming vessel operations. Growing concerns over maritime safety could lead to increased shipping insurance premiums, detours, and longer waiting times for vessels, all contributing to additional costs. Prolonged logistics delays could disrupt the procurement of not only crude oil but also various raw materials and components.

The airline industry is expected to be the most affected sector. Sensitive to oil prices, airlines have already begun restructuring some routes and reducing flights. Among low-cost carriers, some have implemented unpaid leave and entered emergency management mode.

Key export industries, such as semiconductors and automobiles, are also likely to face challenges due to rising costs for parts and raw materials. Additionally, concerns are growing in the semiconductor sector regarding the supply of critical materials like helium, which is largely imported from Qatar.

The petrochemical and construction industries are also closely monitoring the risks from the Middle East. Disruptions in the supply of naphtha, a key raw material for petrochemicals, could increase manufacturing costs, thereby raising the overall burden on manufacturing and construction sectors.

As a result, industry experts warn that prolonged tensions in the Hormuz Strait could negatively impact corporate performance in the second quarter. Given South Korea's high dependence on exports, simultaneous increases in maritime logistics instability and oil prices could disrupt the cost structure across various industries.