Editorial

March 16 (Asia Today) — This commentary is the Asia Today Editor’s Op-Ed.

International oil prices and South Korea’s currency are rising sharply again as the Middle East conflict intensifies, raising growing concerns that the country could slide into stagflation.

On March 13, global crude prices climbed back above $100 per barrel, while the Korean won weakened beyond 1,500 per U.S. dollar in overnight trading. The simultaneous surge in energy prices and the exchange rate has heightened fears that South Korea could face a worst-case scenario in which economic growth slows while inflation accelerates.

Such developments threaten to derail the government’s economic targets for the year – about 2% growth and inflation in the 2% range – making emergency policy responses increasingly urgent.

Brent crude futures for May delivery closed at $103.14 per barrel, up 2.7% from the previous day. It was the first time Brent crude exceeded $100 since August 2022.

U.S. West Texas Intermediate (WTI) crude futures settled at $98.71 per barrel, approaching the $100 threshold. Meanwhile, Dubai crude, the benchmark most relevant to South Korea’s imports, surged to $123.50 per barrel, up $34.60 from the previous week.

As oil prices surged, investors turned toward the U.S. dollar as a safe-haven asset. The won-dollar exchange rate closed at 1,497.5 won per dollar in overnight trading, up 16.3 won from the regular daytime session. During trading, the rate briefly rose to 1,500.9 won, crossing the psychologically important 1,500 level for the first time in seven trading days.

The twin surge in oil prices and the exchange rate has been driven largely by escalating tensions in the Middle East.

Iran has openly threatened to block the Strait of Hormuz, a critical chokepoint through which about 20% of the world’s crude oil supply passes. Iran’s new supreme leader, Mojtaba Khamenei, declared a prolonged confrontation in his first official statement on March 12, saying Tehran should continue using the possibility of a Hormuz blockade as leverage against the United States and Israel.

Oil prices, which had briefly stabilized after U.S. President Donald Trump suggested the conflict might end soon, surged again following the statement.

Tensions escalated further after the United States launched airstrikes on Kharg Island, Iran’s largest oil export hub, on March 13. Iran retaliated by attacking the Fujairah port in the United Arab Emirates, a key oil-export route that bypasses the Strait of Hormuz, putting global energy supply chains on alert.

Trump has also urged five countries – including South Korea, China and Japan – to dispatch naval vessels to the Strait of Hormuz, pushing regional military tensions to a new peak.

Economic analysts warn the shock could have serious consequences for South Korea’s economy.

The Korea Development Institute (KDI) warned last week that rising oil prices linked to the Middle East conflict would increase inflationary pressure while weakening economic growth.

The Hyundai Research Institute estimated that if oil prices climb to $150 per barrel, South Korea’s economic growth rate could fall by 0.8 percentage points.

The government is considering a supplementary budget of 10 trillion to 20 trillion won ($7.5 billion to $15 billion) and temporary fuel tax cuts. However, these measures would only offer short-term relief.

A more fundamental solution lies in reducing South Korea’s heavy reliance on Middle Eastern crude oil, which accounted for 69% of total imports last year. Diversifying energy sources by expanding imports from countries such as Brazil and Norway should be pursued urgently.

The government must mobilize every available policy tool – including measures to stimulate domestic demand – to prevent what could become the fourth Middle East-driven oil shock from pushing the economy into stagflation.

— Reported by Asia Today; translated by UPI

© Asia Today. Unauthorized reproduction or redistribution prohibited.

Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260315010004332

Feb. 27 (Asia Today) — Kim Jong Un declared that North Korea would “permanently exclude” South Korea from the category of fellow countrymen and said there was “absolutely nothing to discuss” with what he called the “most hostile entity.”

In a report delivered at the ruling party congress held on Feb. 20-21, Kim warned that if Seoul “damages our security environment,” Pyongyang could take unspecified actions, including threats implying the “complete collapse” of South Korea through nuclear force. The remarks reaffirmed North Korea’s “two hostile states” doctrine and amounted to one of its most belligerent statements toward the South in recent years.

Kim’s speech appeared to directly rebuff the conciliatory approach pursued by President Lee Jae-myung. Upon taking office, Lee outlined three principles for inter-Korean relations: respect for the North Korean regime, no pursuit of absorption-style unification and the exclusion of hostile acts. At the U.N. General Assembly in New York last September, he proposed the “END Initiative,” aimed at encouraging denuclearization through exchanges and normalization of relations.

Seoul has since halted loudspeaker broadcasts along the Military Demarcation Line, suspended National Intelligence Service broadcasts toward the North, made the Rodong Sinmun more publicly accessible and expressed regret over civilian drone incursions. The administration has also sought to restore the Sept. 19 inter-Korean military agreement, a move that has drawn criticism from some within the military and from U.S. officials.

According to reports, Gen. Xavier Brunson, commander of U.S. Forces Korea, conveyed concerns to the chairman of the Joint Chiefs of Staff that restoring the no-fly zone near the border could “constrain the ROK military’s readiness posture.”

Despite these gestures, Kim dismissed Seoul’s stance as a “clumsy deception and a poor performance.” While rejecting dialogue with the South, he left open the possibility of improved ties with Washington, saying there would be “no reason we cannot get along well” if the United States abandons what Pyongyang calls a hostile policy.

The contrast underscores a long-standing North Korean strategy often described as engaging Washington while sidelining Seoul. The editorial argues that Seoul’s current peace roadmap has effectively stalled, with little progress in efforts to leverage improved ties with Beijing to moderate Pyongyang’s stance.

While peaceful coexistence remains a stated goal, Kim’s latest remarks raise renewed questions about whether continued unilateral conciliatory measures can alter North Korea’s strategic calculus.

— Reported by Asia Today; translated by UPI

© Asia Today. Unauthorized reproduction or redistribution prohibited.

Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260226010008101