The Price of US-Iran Tensions for South Korea
June 27, 2019
In his latest column for the Diplomat Magazine, KEI Senior Director Troy Stangarone underscored that the rising tensions between Iran and the United States will have more far reaching economic implications for South Korea than the curtailment of its oil supply.
For one, the oil imports from Iran serve as not only fuel for Korea's automobiles and power plants, but also its petrochemical industry. Producing a key export product that has increasingly faced Chinese competition, Korean petrochemical refineries are particularly designed for condensates from Iran.
But more broadly, Korean firms were making forways into Iran's broader economy. Hyundai had a contract to build supertankers for Iran. South Korea had also led the world in winning construction contracts in Iran, securing $5.2 billion in 2018 alone. The reimposition of sanctions have frozen these deals.
The broader cost of Iran sanctions on the Korean economy is more than just the potential supply shortage of energy – rather, it is the braoder eocnomic opportunity that Korean firms lost due to adverse conditions.
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