Oil Price Shock Shakes Markets... Growing Fears of 'Chain Reaction' Inflation

[Anchor]

As the war in the Middle East rapidly escalates into a wider conflict, international oil prices have well surpassed 100 dollars per barrel. With growing concerns over rising prices centered on fuel and airfares, analysts warn that red lights are flashing for the domestic economy as the stock market experiences heavy turbulence.

Reporter Kwon Ran has more.

[Reporter]

The KOSPI has given up the 7,000 mark once again in three trading sessions, sliding back into the 6,900 range.

This impact stems from the Middle East conflict expanding, causing international oil prices and interest rates to rise in tandem, while heightening inflationary pressures and worries over an economic slowdown.

Although international oil prices are soaring, the government's assessment is that there are no major issues with short-term supply and demand for now.

It states that more than 90 percent of the crude oil and naphtha import volumes for next month have been secured compared to last year.

Some oil refiners are also known to have secured the volumes they need through the end of this year.

However, if a dual bottleneck crisis materializes—where even the Red Sea, an alternative route to the Strait of Hormuz, is threatened—we can no longer afford to feel at ease.

[Jang Tae-hwan / Associate Research Fellow, Korea Energy Economics Institute: Volumes can be distributed through Suez. However, because shipments have to travel around South Africa's Cape of Good Hope, the transport time becomes much longer than the usual month or so, and freight charges have to be paid for that extended time...] getId

Airfares are already beginning to stir.

The international fuel surcharge, which is divided into a total of 33 tiers, peaked at its highest tier last May before declining, but jumped by 7 tiers entering this month.

For Korean Air, a round-trip ticket between New York and the US incurs over 700,000 won in fuel surcharges alone.

If the recently surged international oil prices are reflected, the fuel surcharges for October to be announced next week are likely to rise further.

Domestic gas station fuel prices are maintaining a stable trend thanks to the maximum petroleum price ceiling system, but finding an exit strategy for the price ceiling has become difficult for the time being.

The 9th maximum price ceiling currently in effect runs through the 18th, but an official from the Ministry of Trade, Industry and Energy hinted at the possibility of an extension, stating that it is not the time to discuss ending the ceiling system.

However, raising the price ceiling to reflect the rise in oil prices could stimulate domestic fuel prices and inflation, while maintaining current levels inevitably increases the fiscal burden to compensate refiners for losses, leaving authorities in a difficult position.

(Photo: Yonhap News)
(Reported by Choi Dae-woong | Video by Kim Jin-won | Graphics by Seo Seung-hyun and Park Cheon-woong)
※ Please note: This article was translated by AI and may contain errors.