South Korea’s Response to Economic Concerns Amid Iran Conflict

On Sunday, Lee Heeong Il, South Korea’s finance minister, announced that the government would “swiftly take necessary measures” to address economic challenges due to escalating tensions with Iran.

“Institutions need to be extremely careful in responding to the evolving situation in the Middle East,” Lee remarked during an emergency meeting in Seoul, which was convened in light of recent US airstrikes targeting Iran’s nuclear initiatives. He emphasized the importance of being prepared for any unusual developments.

The meeting included representatives from the central bank as well as members of South Korea’s highest financial committee, along with officials from the Ministries of Trade and Foreign Affairs.

Lee noted that his agency would keep a close watch on developments in the Middle East and the potential global market reactions since uncertainty is “very high” in the wake of these airstrikes. While he indicated that supply chains and energy reserves in South Korea would not be immediately impacted, he assured that the government was ready for “immediate and bold” actions if any disruptions arose.

Being the fourth-largest importer of crude oil globally, South Korea sources about 70% of its oil from the Middle East, mainly from Saudi Arabia. If Iran were to pursue threats that could obstruct oil shipments through the Strait of Hormuz, South Korea could find itself significantly affected, second only to China and India.

China relies on shipments that pass through the Strait of Hormuz as well, but Iran seldom targets Chinese cargo. While India imports slightly more oil than South Korea through the strait, it has a better chance of compensating for any shortfall by purchasing increased amounts from Russia, another major supplier.

Even prior to these airstrikes, South Korea was already uneasy about its heavy reliance on unstable energy markets in the Middle East. The Ministry of Trade recently held discussions about potentially increasing oil and gas imports from the US, Mexico, and Brazil.

South Korea’s economy significantly depends on global exports, making it vulnerable to shipping fluctuations. An official mentioned that disruptions, such as those caused by Iranian-backed Houthi attacks on civilian vessels in the Red Sea during the recent Gaza conflict, have already inflicted financial strain on South Korean exporters.

“We are closely monitoring the situation to manage supply chain uncertainties,” stated a representative from a South Korean petrochemical company.

Additionally, the Korea Trade and Investment Promotion Agency reported that export growth to Middle Eastern nations, including Syria, Jordan, Lebanon, Israel, and Iran, could face reversals in the latter half of 2025 should security conditions remain unstable.