Government Holds Emergency Meeting on U.S.-Venezuela Situation: "Close Interagency Cooperation If Necessary"

Concerns are mounting over a potential rise in international oil prices as geopolitical tensions escalate following the United States' airstrike on Venezuela. The government has assessed that the immediate impact of this situation on domestic and international financial markets and the real economy will be limited. However, it has decided to respond in close coordination with relevant agencies if necessary.

The Ministry of Economy and Finance held an emergency joint economic situation assessment meeting with related agencies on the morning of January 5 to closely review developments related to the U.S. airstrike on Venezuela and North Korea's ballistic missile launch, as well as their economic impacts. The meeting was conducted via conference call and included key policy and financial authorities such as the Ministry of Foreign Affairs, Ministry of Trade, Industry and Energy, Financial Services Commission, Financial Supervisory Service, Bank of Korea, and the International Finance Center.

This meeting was convened in response to heightened global market tensions after the Donald Trump administration in the United States carried out a surprise airstrike on Venezuela in the early morning of January 4 and arrested Venezuelan President Nicolas Maduro on charges of leading a drug crime organization.

Participants in the meeting assessed that the impact of the U.S. airstrike on Venezuela and North Korea's missile launch on domestic and international financial markets and the real economy would be limited. The government, however, plans to continue strengthening its monitoring system to ensure financial market stability and will closely watch the situation as it develops. The Ministry of Economy and Finance stated, "We plan to closely monitor and respond to future developments and trends in domestic and international financial markets and the real economy in close cooperation with relevant agencies."

In the market, there is a widespread expectation that upward pressure on oil prices will persist for the time being, with close attention being paid to how the situation unfolds. Venezuela, a member of the Organization of the Petroleum Exporting Countries (OPEC), holds the world's largest crude oil reserves, with more than 303.2 billion barrels. However, due to poor management of its oil infrastructure and U.S. sanctions, its daily production is limited to just 800,000 to 900,000 barrels (less than 1% of global output). Moreover, most of its exports are restricted to China, resulting in a minimal share in the global oil market. Nevertheless, some analysts suggest that as China seeks alternative suppliers and increases imports from other oil-producing countries, this could put upward pressure on Dubai crude prices in the short term.

There are also projections that if geopolitical risks intensify, demand for safe-haven assets such as the U.S. dollar and gold will increase, which could put downward pressure on the Korean won. At the end of last year, government intervention brought the won-dollar exchange rate down to the 1,440 won range. Paik Byunghoon, professor of economics at Ewha Womans University, commented, "If this situation leads to a strong dollar, the won-dollar exchange rate could temporarily rise, but given the government's policy measures to curb volatility, a significant increase is unlikely."