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Is Korea Ready for the “Third Oil Shock?”
Region: Asia
Location: Korea, South
Published May 25, 2011
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International oil prices have risen dramatically, raising the possibility of a “third oil shock.” During the first oil crisis in 1973, the annual average price soared to $85/barrel (bbl) in today’s equivalent value. Just six years later, the second oil shock arrived, as crude averaged $152/bbl. As of May this year, the average price stood around $99/bbl, already surpassing the price of the first oil shock. The average monthly price of Dubai crude oil, which accounts for 82% of Korea’s oil imports, increased from $60/bbl in January 2007 to an all time high of $140 recently. Oil prices thus increased by nearly 150% in the past 17 months. The Korea Energy Economic Institute predicted that the price could rise to an average $140/bbl in the second half of the year, or to an average $121/bbl for the full year. Officials of the Organization of Petroleum Exporting Countries (OPEC) as well as other global investment firms have a prevailing negative view that the price could surge to $200/bbl by 2010. What if oil hits $200? Is Korea ready for such an oil shock?

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