What Happened

On May 9, 2026, Maeil Business Newspaper reported that U.S. President Donald Trump announced a three-day ceasefire between Russia and Ukraine from the 9th to the 11th. However, CNBC analyzed that the Trump-Xi Jinping summit was a key deadline for resolving the U.S.-Iran conflict, and President Trump's willingness to end the war with Iran was one reason why the market was not agitated. Amid such geopolitical uncertainty in the Middle East, the weekly average prices of gasoline and diesel at domestic gas stations rose for six consecutive weeks, indicating persistent inflationary pressure. According to Opinet, the oil price information system of Korea National Oil Corporation, the average selling price of gasoline at gas stations nationwide in the first week of May (3rd-7th) increased compared to the previous week.

Why It Matters

The simultaneous announcement of President Trump's Russia-Ukraine ceasefire and the mention of his willingness to resolve the U.S.-Iran conflict suggest that the current global geopolitical situation is highly complex. Instability in the Middle East, in particular, directly impacts international oil prices, acting as a key factor exacerbating global inflationary pressures. The fact that international oil prices have risen for six consecutive weeks indicates a complex interplay of supply chain instability and increased demand, posing a significant burden on central banks' monetary policy decisions worldwide. As seen in past oil shock incidents, prolonged high oil prices can slow global economic growth and heighten stagflation concerns, making this a critical issue. Uncertainty in the Middle East can also severely impact energy security and global trade flows.

Impact on the Korean Market

Persistent geopolitical tensions in the Middle East and rising international oil prices will have multifaceted impacts on the Korean economy. As Korea heavily relies on crude oil imports, rising oil prices will increase companies' production costs and logistics expenses, leading to higher prices for final consumer goods and weakening households' real purchasing power. In particular, the six consecutive weeks of rising fuel prices will further intensify domestic inflationary pressures, potentially increasing the likelihood of the Bank of Korea raising interest rates or delaying rate cuts. This will act as a factor for rising domestic bond yields and could exert upward pressure on the KRW/USD exchange rate. While it may be positive for the refining and shipbuilding industries, it will negatively impact industries with high fuel cost ratios, such as aviation, shipping, and petrochemicals. Demand for safe-haven assets like gold may increase, and Bitcoin could also gain some attention as a geopolitical risk hedge.

Key Stock Analysis

  • S-Oil (010950): Rising international oil prices positively impact the profitability of refining companies like S-Oil by increasing inventory valuation gains and improving refining margins. However, there is also a possibility of demand slowdown if high oil prices persist.
  • Korean Air (003490): Rising oil prices increase the burden of fuel costs, one of the largest expense items for airlines, negatively impacting profitability. Prolonged high oil prices could lead to pressure for higher air ticket prices, resulting in reduced passenger demand.
  • WTI (WTI Crude Oil): Persistent geopolitical tensions in the Middle East and supply uncertainties are key factors driving up WTI crude oil prices. The six consecutive weeks of increases demonstrate that these concerns are reflected in the market.
  • GOLD (Gold): As geopolitical tensions escalate, safe-haven demand strengthens, putting upward pressure on gold prices. Demand for inflation hedging due to rising oil prices also acts as a supporting factor for gold prices.
  • KR10Y (Korea 10-year Treasury Bond): Inflationary pressure from rising oil prices exacerbates the Bank of Korea's monetary policy burden and increases the likelihood of interest rate hikes, which could exert upward pressure on Korea's 10-year Treasury bond yields.
  • BTC (Bitcoin): Increased geopolitical risk can stimulate demand not only for traditional safe-haven assets but also for Bitcoin (BTC), often referred to as 'digital gold'. However, there is also a persistent risk of a simultaneous decline during liquidity contractions.

Future Scenarios

Optimistic Scenario: If President Trump's diplomatic efforts lead to a de-escalation of tensions in the Middle East, international oil prices could stabilize, and inflationary pressures might ease. This would positively impact global economic recovery and reduce external uncertainties for the Korean economy. Lower oil prices could alleviate cost burdens for related industries such as aviation and shipping, contributing to improved performance.

Pessimistic Scenario: If geopolitical tensions in the Middle East persist longer than expected, or if President Trump's diplomatic efforts fail, international oil prices could rise further, placing a severe burden on the global economy. This would deepen stagflation concerns and exacerbate the dilemma for central banks worldwide. Korea could face a double whammy of worsening trade balance and rising inflation due to high oil prices, which could dampen overall market sentiment. Investors should closely monitor President Trump's diplomatic moves, changes in the Middle East situation, and international oil price trends.