South Korean stocks in energy, construction, and shipping sectors have surged sharply following U.S. and Israeli airstrikes targeting a top Iranian commander. Heightened tensions near the Strait of Hormuz, a vital shipping lane, have driven the rally as companies brace for potential disruptions.
Energy Sector Leads Gains
Energy firms report assessing charter vessel options and monitoring major route exchange rates to minimize impacts. The Strait of Hormuz handles 20-30% of global oil shipments, posing massive economic risks if blocked. For South Korea, 69.1% of crude oil imports pass through the strait, with 95% of those volumes relying on this route.
Industry executives state, “A Hormuz blockade would halt oil imports and erase shipping volumes entirely.” They add, “Even minor triggers could gradually strain charter availability.” Firms evaluate tanker crew safety amid rising tensions and promote alternative corporate routes.
Government reviews of non-chukyu reserves exceeding 1 million barrels continue, though viewed as short-term measures. Prolonged state actions could amplify economic burdens, fueling global uncertainties that worry businesses.
Aviation Adjustments for Safety
Airlines prioritize safety in operations. Korean Air safely operated its KE951 flight from Incheon to Dubai on June 28 at 1:13 p.m., returning without incident. The KE952 return flight that evening also arrived safely, as did a planned Wangbok service on the 1st.
Domestic carriers operate Incheon-Dubai routes about seven times weekly to Israel-bound flights. Recent Korean Air schedule tweaks focus solely on minimizing losses. Previously, the Incheon-Tel Aviv Tel Aviv line suspended service after the October 2023 Hamas attack on Israel, a status maintained since.
Industry anticipates rebound losses in both directions due to fuel and exchange fluctuations.
Shipping and Construction Face Headwinds
Shipping operators calculate impacts from bilateral oil surges. Rising fuel costs for non-deliveries, including exchange fees and Jeongbi fuel, could reach 30% of results. Hormuz-transiting vessels face heightened negative assessments.
SK Ocean and Pan Ocean, among others, route half their Europe lines through the strait. Past risks prompted U.S.-U.K. carrier deployments protecting banks. This time, direct U.S. state involvement shifts dynamics, prompting adjustments.
External carriers bypassing Hormuz already redirect to Jeongseon or Uhoe routes. Domestic firms explore cooperation pacts, route changes, and non-business calculations, though re-entry to affected states remains limited. For now, only two Uhoe routes operate amid concentrated Boeing and other non-delivery damages.
Fundamentally, companies address broader instabilities. Executives note, “Closer government ties enable fewer non-business calculations.” They predict, “This clash keeps Hormuz intact short-term, allowing gradual normalization rather than abrupt shifts.”
