Trump declared the start of a 'ship liberation' operation in the Strait of Hormuz, with Middle East geopolitical tensions at their peak.

What Happened

Donald Trump, the U.S. President, officially announced on the morning of May 4, 2026 (Middle East local time) that the U.S. would assist third-country vessels trapped in the Strait of Hormuz to safely exit, effectively signaling the start of a 'Strait of Hormuz Liberation Operation'. This signifies direct U.S. intervention in global supply chain disruptions caused by the months-long blockade of the Strait of Hormuz. Military tensions in the Middle East have reached their peak as Iran stated it had received a response to the latest U.S. peace proposal, yet President Trump maintained his stance of 'unacceptable Iranian peace proposal'. Meanwhile, German Chancellor Friedrich Merz, who had strongly criticized President Trump's Middle East policy, faced a tough response from the Trump administration, including the withdrawal of U.S. troops from Germany and increased automobile tariffs, leading to a rare spectacle of him attempting to manage the situation.

Why It Matters

President Trump's declaration of a vessel liberation operation marks a significant turning point, suggesting that geopolitical risks in the Middle East could escalate beyond mere rhetorical threats to actual military action. The Strait of Hormuz is a critical chokepoint, accounting for approximately 20% of the world's seaborne oil shipments. Its blockade directly leads to a surge in international oil prices and a paralysis of global supply chains. Japan has already been directly hit by the blockade, with its crude oil imports in March recording their lowest level in 37 years. The Trump administration's hardline policy towards Iran is a major factor destabilizing international oil prices, exacerbating inflationary pressures, and increasing concerns about a global economic recession. Furthermore, as seen in the case of the German Chancellor, the Trump administration's 'America First' stance is creating cracks in relationships with traditional allies, amplifying uncertainty in international affairs.

Impact on the Korean Market

The escalating military tensions in the Strait of Hormuz are expected to have direct and widespread impacts on the Korean economy. Korea relies heavily on the Middle East for a significant portion of its crude oil imports. Rising oil prices will act as upward pressure on domestic inflation and increase production costs for companies, potentially leading to a deterioration in profitability. Industries with high energy dependency, such as refining, petrochemicals, aviation, and shipping, will inevitably be hit. The KRW/USD exchange rate will face upward pressure due to the spread of safe-haven sentiment, further fueling import price inflation. However, the defense industry sector could experience positive effects due to expectations of increased demand stemming from heightened geopolitical risks. In the bond market, strengthening safe-haven sentiment could lead to a short-term decline in government bond yields. However, if inflation concerns persist, this could eventually shift to upward pressure on interest rates in the long term.

Key Stock Analysis

• WTI Crude Oil (WTI, commodity): The escalation of military tensions in the Strait of Hormuz and the U.S. declaration of direct intervention will maximize crude oil supply uncertainty, exerting strong upward pressure on WTI crude oil prices. This will be a factor keeping oil prices at high levels despite concerns about a global economic slowdown.
• Brent Crude Oil (BRENT, commodity): Similar to WTI, the Strait of Hormuz risk will push up Brent crude oil prices. It will directly impact crude oil supply and demand in Europe and Asia, and is expected to be a primary cause of increased oil price volatility.
• Gold (GOLD, commodity): As geopolitical tensions in the Middle East intensify and global economic uncertainty grows, demand for gold, a representative safe-haven asset, will surge. Investors will purchase gold due to risk-aversion sentiment, and gold prices are expected to continue their upward trend.
• Bitcoin (BTC, crypto): In addition to traditional safe-haven assets like gold, Bitcoin's status as a digital safe-haven asset has recently strengthened. As geopolitical risks increase, alternative investment demand for Bitcoin may flow in, potentially leading to price increases.
• US10Y (U.S. 10-year Treasury, bond): Increased geopolitical instability could stimulate safe-haven sentiment in the short term, potentially lowering U.S. 10-year Treasury yields. However, if inflation pressures from rising oil prices persist in the long term, expectations for interest rate cuts could recede, shifting to upward pressure on yields.
• SK Innovation (096770, stock): Rising oil prices could increase inventory valuation gains in the refining segment but simultaneously act as a cost burden, pressuring margins in the petrochemical segment. Overall profitability will largely depend on oil price fluctuations and refining margins.
• S-Oil (010950, stock): Similar to SK Innovation, rising oil prices could be positive for S-Oil's refining segment profitability. However, sustained high oil prices also pose risks of demand contraction and margin pressure. Earnings volatility is expected to increase depending on complex market conditions.
• Korean Air (003490, stock): Rising international oil prices will directly lead to increased jet fuel costs, significantly raising Korean Air's operating expenses. This will be a major factor deteriorating profitability and could lead to pressure for fare increases.

Future Scenarios

Geopolitical tensions in the Middle East are unlikely to ease anytime soon. The confluence of the Trump administration's hardline policy towards Iran and Iran's backlash means the possibility of military conflict surrounding the Strait of Hormuz remains. An optimistic scenario involves the partial lifting of the Strait of Hormuz blockade due to U.S. intervention, resuming crude oil shipments, and the reopening of dialogue channels with Iran. In this case, oil prices might stabilize in the short term, but fundamental uncertainties would persist. A pessimistic scenario involves U.S. military intervention provoking a strong backlash from Iran, escalating into a full-scale war, and the long-term paralysis of the Strait of Hormuz. In this event, international oil prices could skyrocket, and the global economy could fall into a severe recession. Investors should pay close attention to further U.S. military actions, Iran's response, and international mediation efforts. It is particularly crucial to carefully monitor oil price and exchange rate volatility and to prudently formulate investment strategies for energy-related companies and safe-haven assets.