[Featured Stock] Geukdong Yuhwa Hits Upper Limit... Petrochemical Stocks Rise Amid US-Iran Tensions

Impact of Rising International Oil Prices

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] As military conflict between the United States and Iran escalates, international oil prices have surged, leading to an upward trend in domestic petrochemical stocks.

As of 2 PM on the 6th, Korea Petrochemical is trading at 4,650 KRW, up 29.89% (1,070 KRW) from the previous trading day’s limit. SH Energy & Chemical and Korea Petroleum are also showing gains.

The rise in international oil prices due to intensified tensions between the U.S. and Iran is interpreted as a factor causing cost increases for domestic petrochemical companies. Earlier, on the 3rd (local time), under the directive of President Donald Trump, the commander of Iran’s Revolutionary Guard Quds Force, Soleimani, was killed in a U.S. airstrike, making the military conflict between the two countries the biggest variable in the stock market.

Sangyoung Seo, a researcher at Kiwoom Securities, explained, "This year, the KOSPI was expected to peak in the first quarter and then decline from the third and fourth quarters due to economic slowdown and the U.S. presidential election, but this incident is likely to accelerate the timing of the index adjustment." He added, "As Iran continues small-scale military operations in response, related uncertainties will prolong and concerns about economic slowdown will intensify." He further stated, "The KOSPI this year may fall below the initially expected fluctuation range (1900?2250). Although the possibility is currently low, if a full-scale war between the U.S. and Iran occurs, international oil prices will surge, increasing the likelihood of a global economic recession, which could lead to a downward revision of the KOSPI’s expected fluctuation range to 1800?2200."