Experts' take on Iran sanctions' economic impact on South Korea
Arirang News
2018-11-06
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Iran has the fourth-largest proved crude oil reserves in the world,... and South Korea is one of the Islamic Republic's best customers.
Our Ko Roon-hee spoke to some experts to hear how they think the Trump administration's new sanctions could affect the Korean economy.
South Korean companies relying on trade with Iran were relieved to hear South Korea was granted temporary exemptions from Washington's sanctions on Tehran that have snapped back into place.
But the waiver, while extendable, only lasts up to 180 days...and local experts are divided on how this could affect the South Korean economy.
Some say the sanctions will lead to rising international oil prices...due to slumping supply.
For instance, Goldman Sachs estimates that Iranian crude exports will fall to 1-point-1-5 million barrels a day by the end of the year, down from 2-point-5 million barrels in mid 2018.
High international oil prices are not only likely to negatively affect local firms' overall business sentiment, but also raise producer and consumer prices.
The problem is especially serious for South Korea...because the nation's crude oil imports rely heavily on Iran.
"In 2017, Iran was the third largest provider of crude oil to South Korea when comparing imports. Saudi Arabia was the biggest and Kuwait second. U.S. sanctions on Iran might lead to energy supply problems in South Korea."
Others say the economic impact will be limited...because there are other ways to overcome supply shortages.
"Other oil producing countries such as Saudi Arabia or Iraq are likely to increase production. They can boost their exports and make up for any shortages from Iran."
The first round of U.S. sanctions on Tehran in August negatively affected South Korea's overall trade with Iran.
According to a report released by the Korea International Trade Association in September, South Korea's exports to Iran marked 140-million U.S. dollars in August…down more than 40 percent compared to the previous month.
But what's more important,...according to experts,...are import numbers...since South Korea's exports to Iran accounted for less than half-a-percent of the country's total exports in the first nine months of this year.
Imports plunged by almost 70 percent in August compared to the previous month,... with crude oil accounting for most of the outbound shipments.
Ko Roon-hee, Arirang News.
Our Ko Roon-hee spoke to some experts to hear how they think the Trump administration's new sanctions could affect the Korean economy.
South Korean companies relying on trade with Iran were relieved to hear South Korea was granted temporary exemptions from Washington's sanctions on Tehran that have snapped back into place.
But the waiver, while extendable, only lasts up to 180 days...and local experts are divided on how this could affect the South Korean economy.
Some say the sanctions will lead to rising international oil prices...due to slumping supply.
For instance, Goldman Sachs estimates that Iranian crude exports will fall to 1-point-1-5 million barrels a day by the end of the year, down from 2-point-5 million barrels in mid 2018.
High international oil prices are not only likely to negatively affect local firms' overall business sentiment, but also raise producer and consumer prices.
The problem is especially serious for South Korea...because the nation's crude oil imports rely heavily on Iran.
"In 2017, Iran was the third largest provider of crude oil to South Korea when comparing imports. Saudi Arabia was the biggest and Kuwait second. U.S. sanctions on Iran might lead to energy supply problems in South Korea."
Others say the economic impact will be limited...because there are other ways to overcome supply shortages.
"Other oil producing countries such as Saudi Arabia or Iraq are likely to increase production. They can boost their exports and make up for any shortages from Iran."
The first round of U.S. sanctions on Tehran in August negatively affected South Korea's overall trade with Iran.
According to a report released by the Korea International Trade Association in September, South Korea's exports to Iran marked 140-million U.S. dollars in August…down more than 40 percent compared to the previous month.
But what's more important,...according to experts,...are import numbers...since South Korea's exports to Iran accounted for less than half-a-percent of the country's total exports in the first nine months of this year.
Imports plunged by almost 70 percent in August compared to the previous month,... with crude oil accounting for most of the outbound shipments.
Ko Roon-hee, Arirang News.
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