Airplanes get ready to take off at Gimpo International Airport in Gangseo District, western Seoul, on May 7.NEWS1
A de facto end to the Iran war has brought relief to Korean companies, although the impact is expected to vary by sector.
Airlines and shipping companies are expected to benefit from easing tensions, while shipbuilders, refiners and petrochemical companies remain cautious as they monitor oil prices and market conditions.
U.S. President Donald Trump on Sunday announced that negotiations to end the war with Iran have been completed. The two sides are reported to have agreed to keep the Strait of Hormuz open and lift maritime blockades.
The Iran War, which began in February, is now entering its final stages after 106 days.
Amid the good news, companies are keeping an eye on international oil prices. The Strait of Hormuz is a strategic chokepoint through which about 20 percent of the world's seaborne crude oil shipments pass. Most of the crude oil Korea imports from the Middle East also travels through the strait.
Concerns had grown that oil prices could rise above $100 per barrel if the conflict continued, but many expect supply chains will normalize following the framework deal to end the war.
The airline industry is expected to be one of the biggest beneficiaries.
Jet fuel typically accounts for 20 percent to 30 percent of an airline's operating costs. For instance, Korean Air spends more than 4 trillion won ($2.64 billion) annually on fuel. If oil prices stabilize, airlines can reduce fuel costs and lower fuel surcharges, potentially boosting passenger demand.
"Airlines are affected by both oil prices and exchange rates," a Korean Air representative said. "Easing tensions in the Middle East will reduce fuel-cost burdens and help stabilize exchange rates, which will have a positive effect on earnings."
Fuel prices are displayed as a gas station in Seoul on June 15.NEWS1
The shipping industry is also optimistic.
During the war, risks associated with passing through the Strait of Hormuz disrupted vessel operations and drove up war-risk insurance premiums. The agreement has increased the likelihood that Middle Eastern shipping routes will return to normal.
But the shipbuilding industry has a mixed outlook.
Expectations for new very large crude carriers and liquefied natural gas carrier orders that strengthened during the war could ease following the agreement.
However, analysts say the impact is likely to be limited as Middle Eastern countries are expected to continue investing in energy infrastructure and offshore plant projects.
Refiners welcome the prospect of more stable crude oil supplies and reduced logistics risks but remain highly sensitive to the extent of any decline in oil prices.
While the normalization of oil prices would ease crude procurement pressures, refiners typically hold several months' worth of crude inventories, raising concerns about inventory valuation losses if prices decline sharply.
With refining margins recently showing signs of recovery, lower oil prices could support demand for petroleum products over the mid- to long-term. In the short term, however, earnings volatility could increase.
"The end of the war is positive in terms of stabilizing crude oil supplies," an industry spokesperson said. "However, refiners' profitability will depend on how quickly and how far oil prices fall."
Vessels at the Strait of Hormuz, as seen from Musandam, Oman, June 14REUTERS/YONHAP
The petrochemical industry is relieved by the prospect of more stable raw-material supplies but is concerned about worsening oversupply from China.
If Iranian crude exports return to normal, Chinese petrochemical producers could increase operating rates, potentially adding to existing supply gluts.
Business groups also stressed that it remains to be seen whether the agreement will hold and bring greater stability to the Middle East.
Even if the war ends, it may take considerable time for oil prices, exchange rates and logistics markets to fully normalize.
"The agreement to end the war is positive, but uncertainty surrounding the business environment has not been completely resolved," Lee Sang-ho, head of the economic policy division at the Federation of Korean Industries, said.
"Companies will have no choice but to continue focusing on managing uncertainties and risks while monitoring fluctuations in oil prices and exchange rates, U.S. tariff policies and the normalization of logistics markets."
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
