Geopolitics2026-05-17★★★★★

Middle East geopolitical risk escalates, global energy and food crisis intensifies

As US-Israel attacks on Iran and the Strait of Hormuz blockade become protracted, international oil prices are surging, and concerns about a global food crisis are growing due to disruptions in the fertilizer supply chain. The International Energy Agency (IEA) has warned of the worst oil supply disruption in history, and with no practical solutions emerging from the US-China summit, uncertainty is escalating. Iran has further escalated tensions by announcing the imposition of tolls on the Strait of Hormuz.

What Happened

The global energy market has recently faced an unprecedented crisis as the joint US-Israel attack on Iran and Iran's subsequent prolonged blockade of the Strait of Hormuz have escalated. According to OilPrice.com, the International Energy Agency (IEA) has characterized the current situation as the 'worst oil supply disruption ever,' warning of its repercussions on the global economy. In particular, severe disruptions to trade between Asia and Europe have impacted the fertilizer supply chain, raising the possibility of a global food crisis. Amidst this, US President Donald Trump stated that Chinese President Xi Jinping agreed to reopen the Strait of Hormuz, but CNBC reported no signs of substantial Chinese intervention, adding to the complexity of the situation. Japanese refiners are showing signs of resuming LNG imports through the Strait of Hormuz, but the prevailing analysis suggests this is merely a short-term reprieve. Iran's announcement of imposing a transit fee for the Strait of Hormuz is further intensifying upward pressure on international oil prices.

Why It Matters

Geopolitical risks in the Middle East are a critical variable that shakes the foundation of the global economy, extending beyond mere regional conflicts. The Strait of Hormuz is a crucial chokepoint accounting for approximately 20% of the world's seaborne oil shipments, and instability there immediately implies a surge in global energy prices. The severity of this situation is significant as it could replicate an energy crisis similar to the 1970s oil shocks. High oil prices directly translate into inflationary pressure, burdening central banks' monetary policies, which in turn leads to a vicious cycle of increasing recession fears. In particular, disruptions to the fertilizer supply chain can lead to soaring agricultural prices, further exacerbating inflation and potentially causing social instability. The fact that even the US-China summit failed to present a clear solution to the Middle East issue demonstrates the difficulty of international cooperation, further amplifying global uncertainty.

Impact on the Korean Market

As a country highly dependent on energy imports, South Korea could suffer severe damage across its economy from an energy crisis originating in the Middle East. A surge in international oil prices will push up import costs, intensifying inflationary pressure, which could lead to calls for the Bank of Korea to raise interest rates. Increased transportation and logistics costs could worsen the profitability of export companies, and industries highly sensitive to oil prices, such as aviation, shipping, and petrochemicals, will be directly affected. Furthermore, rising energy costs are expected to lead to increased production costs for businesses and reduced real income for households, negatively impacting domestic consumption. As safe-haven sentiment strengthens, upward pressure on the KRW/USD exchange rate may persist, a factor that could accelerate foreign capital outflow from the domestic stock market.

Key Stock Analysis

WTI Crude Oil (WTI, commodity): Prices are highly likely to surge due to growing concerns over supply disruptions caused by the Strait of Hormuz blockade and escalating Iran-US/Israel conflict. This will be a key factor intensifying inflationary pressure on the global economy. (sentiment: positive)
Brent Crude Oil (BRENT, commodity): Similar to WTI, this commodity reacts most directly to Middle East geopolitical risks. As a benchmark oil price for European and Asian markets, a sharp rise is expected, driving up global energy costs. (sentiment: positive)
Gold (GOLD, commodity): Safe-haven sentiment will strengthen as geopolitical uncertainty peaks. Gold's appeal as an inflation hedge will also increase, likely securing further upward momentum. (sentiment: positive)
S-Oil (010950, stock): A surge in oil prices increases refiners' cost burden but can also lead to improved refining margins. If product price increases due to supply shortages outweigh the rise in raw material costs, it could be positive in the short term, but concerns about demand contraction persist in the long term. (sentiment: positive)
Korea Gas Corporation (036460, stock): The rising import unit price of natural gas, including LNG, will significantly increase cost burdens. This is expected to lead to deteriorating performance and pressure for tariff hikes, resulting in a negative impact. (sentiment: negative)
Korean Air (003490, stock): Fuel costs constitute a significant portion of an airline's operating expenses. A surge in oil prices will directly worsen Korean Air's profitability, and the possibility of demand contraction due to fare increases cannot be ruled out. (sentiment: negative)
Korea Electric Power Corporation (015760, stock): Rising power generation fuel costs (coal, LNG, etc.) will increase KEPCO's burden for purchased electricity, severely negatively impacting its performance. While pressure for electricity tariff hikes will grow, immediate reflection may be difficult due to government regulations. (sentiment: negative)
Bitcoin (BTC, crypto): Amid extreme geopolitical risks and instability in traditional financial markets, Bitcoin may partially serve as a safe-haven asset, acting as a refuge for investors, as 'digital gold.' (sentiment: positive)

Future Scenarios

Optimistic Scenario: This scenario involves major countries like the US and China finding a diplomatic solution with Iran, leading to an easing of the Strait of Hormuz blockade and a rapid normalization of the energy supply chain. In this case, oil prices would stabilize, and inflationary pressures could gradually ease. The fertilizer supply chain would also recover, reducing concerns about a food crisis. Pessimistic Scenario: This involves the Middle East conflict becoming prolonged or escalating, leading to the continued or intensified blockade of the Strait of Hormuz. In this case, international oil prices would skyrocket to uncontrollable levels, and fears of a global recession and stagflation could materialize. The food crisis would deepen, and countries would strengthen protectionism, making international cooperation even more challenging. Investors should closely monitor oil price trends, military movements in the Middle East, and the diplomatic efforts of major countries. In particular, the international community's response to Iran's measure of imposing a transit fee for the Strait of Hormuz will be a crucial variable.

Impact analysis

CommodityWTI Crude Oil

📈Beneficiary

Prices are highly likely to surge due to concerns over supply disruptions stemming from escalating geopolitical risks in the Middle East. This will be a key factor in exacerbating global inflationary pressures.

CommodityBrent Crude Oil

📈Beneficiary

Similar to WTI, Brent is a commodity that reacts most directly to Middle East geopolitical risks. A sharp price increase is expected, which will drive up global energy costs.

CommodityGold

📈Beneficiary

As geopolitical uncertainty peaks, safe-haven demand strengthens. Gold's appeal as an inflation hedge also increases, suggesting it will gain further upward momentum.

S-Oil

📈Beneficiary

While surging oil prices increase refiners' cost burden, if product price increases due to supply shortages outpace the rise in raw material costs, it could positively impact refining margins in the short term.

Korea Gas Corporation (KOGAS)

📉Headwind

Rising import prices for natural gas, including LNG, will significantly increase cost burdens. This is expected to negatively impact earnings and lead to pressure for tariff hikes.

Korean Air

📉Headwind

Fuel costs constitute a significant portion of airline operating expenses. Surging oil prices will directly deteriorate Korean Air's profitability, and there is also a possibility of demand contraction due to fare increases.

Korea Electric Power (KEPCO)

📉Headwind

Rising power generation fuel costs (coal, LNG, etc.) will increase KEPCO's power purchase costs, severely negatively impacting its earnings. While pressure for electricity tariff hikes will intensify, immediate reflection may be difficult.

CryptoBitcoin

📈Beneficiary

Amid extreme geopolitical risks and instability in traditional financial markets, Bitcoin may partially serve as a safe-haven asset, acting as 'digital gold' and a refuge for investors.