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Surge in Korean exports to Middle East at risk with Israel-Iran escalating tensions

Published: 19 Jun. 2025, 16:44 Updated: 19 Jun. 2025, 20:14

Missiles launched from Iran towards Israel are seen from Hebron in the Israeli-occupied West Bank on June 19. [REUTERS/YONHAP]

A surge in Korean exports to the Middle East is now at risk as tensions escalate between Israel and Iran, raising fears of soaring oil prices and snarled logistics.

Korean exports to the region climbed sharply in the first five months of 2025, according to a report from the Korea Trade-Investment Promotion Agency (Kotra), released Thursday.

Exports to Israel rose 53 percent from the same period last year, while those to Iran increased 9.1 percent. Trade with neighboring countries also grew: Exports to Jordan were up 25.9 percent, Lebanon 16.7 percent, and Syria surged a staggering 1,396.3 percent.

Key export items include automobiles, cosmetics and construction equipment.

Although the region accounts for only about 2 percent of Korea’s total exports, Kotra emphasized its strategic value as a growth market and a gateway to Africa. Hyundai Motor’s groundbreaking of its first Middle Eastern production plant in Saudi Arabia in May underscores that potential.

The LyondellBasell Houston refinery is seen at sunset in Houston on June 18 [GETTY IMAGES/YONHAP]

However, the report warned that a prolonged conflict between Israel and Iran could hinder this momentum. The biggest risks stem from possible spikes in oil prices and shipping costs.

With fears of disrupted oil supplies from the region, freight rates for very large crude carriers have already risen over 20 percent, and oil prices could surpass $100 per barrel.

Logistics have also been affected. Airspace closures over Iran, Israel and Iraq have led to canceled flights and rerouted shipping traffic. Geopolitical instability is forcing more vessels to take longer, alternative routes, leading to port congestion and delayed deliveries.

Kotra noted that the possibility of a complete shutdown of the Strait of Hormuz remains low. The narrow waterway handles 99 percent of Korea’s crude oil imports from the Middle East.

“If closed, oil prices would likely soar,” the report said. “But the presence of U.S. naval forces makes a total shutdown unlikely.”

Trade containers are stacked at Busan Port on June 11. [NEWS1]

Nonetheless, threats such as Iranian attacks on tankers or the planting of sea mines pose ongoing risks, Kotra added. Any rerouting or shipping delays would inevitably push sea freight costs higher.

Still, the trade agency highlighted potential upside for Korean defense companies if regional security concerns lead to increased military spending.

Countries like Saudi Arabia and the United Arab Emirates have launched large-scale defense modernization programs. Saudi Arabia, located between Israel and Iran, has notably stepped up efforts to bolster its military capabilities.

“In response to the crisis, we immediately activated a Middle East emergency task force to monitor energy and export logistics,” Kotra said. “We will continue working closely with our overseas trade offices to support Korean exporters and firms operating in the region.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY NA SANG-HYEON [[email protected]]