As tensions rise in the Middle East due to military clashes between the United States and Iran, KOTRA has conducted an urgent review of key raw material supply chains and export logistics. While local production disruptions are limited, the potential for rising prices, freight costs, and transportation delays poses a significant burden on domestic companies.
KOTRA held its fourth Post-Middle East Task Force meeting at its headquarters in Seoul on August 3, assessing production and logistics trends for items heavily reliant on the region and discussing response strategies.
Following the signing of a ceasefire memorandum between the U.S. and Iran in June, KOTRA transitioned its 'Middle East War Task Force' to a 'Post-Middle East Task Force.' Although the focus shifted from crisis management to post-conflict market entry support, recent Iranian attacks on vessels and the re-blockade of the Strait of Hormuz have prompted a return to emergency response measures.
According to assessments from KOTRA's 13 trade offices in the Middle East, the main risks identified are not local production issues but rather increases in product prices, maritime freight rates, and transportation delays.
Naphtha prices surged to $1,208 during the Middle East conflict but fell to $635 in June. However, as of July 29, prices have risen again to $841.
Tensions in the Red Sea region are also exacerbating logistics burdens. The threat from Houthi rebels has led to an increase in vessels rerouting around the Cape of Good Hope, resulting in longer transportation times and higher costs for shipments to and from the Middle East.
Naphtha prices have risen approximately 32% from their June lows, and only nine out of 24 ports along the GCC coast are currently operating normally.
KOTRA is re-establishing contact with previously identified alternative suppliers to confirm their production capacity and availability. In the event of supply disruptions, KOTRA has also revamped its supply chain information to connect domestic companies with overseas trade offices immediately.
For domestic companies importing items heavily reliant on the Middle East, KOTRA is conducting weekly assessments of supply and demand conditions. In addition to the existing 'Emergency Response Consultation Desk for Middle East War,' KOTRA is operating a 'Supply Chain Help Desk' to assist in identifying alternative suppliers and securing shipping permits.
Since the beginning of this year, 20 supply chain-related issues have been reported to the help desk. KOTRA plans to monitor port operations daily through its 13 trade offices in the Middle East and expand consulting services for logistics routes and support for overseas joint logistics centers.
Kang Kyung-sung, President of KOTRA, stated, "We are closely monitoring the supply chain and export logistics situation for key items in preparation for the prolonged tensions in the Middle East. If any supply or export issues arise, we will respond swiftly through the help desk."
* This article has been translated by AI.
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