Global crude prices have surged past $117 per barrel, setting off alarm bells for year-end inflation. Triggered by U.S. President Donald Trump hinting at potential military action against Iran and ongoing attacks on Middle Eastern oil infrastructure, concerns over crude supply disruptions are escalating once again.

With energy import costs and producer prices for coal and petroleum products both soaring more than 50% year-on-year last month, cumulative cost burdens are mounting. Despite a stronger Korean won, rebounding import prices are intensifying upward pressure on consumer prices.

Experts warn that if the Middle East conflict intensifies, oil prices could climb even higher. Moreover, even if crude supplies recover, shortages of refined petroleum products alongside high freight and insurance costs will continue to strain the economy. With accumulated cost increases trickling down to consumer prices with a time lag, concerns are growing that the slowdown of year-end inflation may be delayed.

Energy Products Dominate Import Price Surges

According to the Bank of Korea on the 26th, among the items whose import prices in Korean won rose year-on-year in September, the top four with the largest weights were crude oil, liquefied natural gas (LNG), naphtha, and bituminous coal.

Crude oil carried the heaviest weight in total import prices at 12.25%, followed by LNG (5.48%), naphtha (2.94%), and bituminous coal (2.45%). Combined, these four items account for 23.1% of the total index.

Weight refers to how much price fluctuations of individual items are reflected in the overall import price index; items with larger import scales have a greater impact on the entire index even with the same magnitude of price changes.

The price growth rates of these key items vastly outpaced the overall import price inflation rate. In September, import prices for crude oil skyrocketed 54.4% compared to the same month last year. LNG rose 32.9%, naphtha 40.5%, and bituminous coal 37.5%, while the overall import price index grew by 17.6%.

Within just the past month, crude import prices jumped 21.6%, driving the overall import price index up by 1.7% month-on-month. This marked a rebound after four months, following three consecutive months of decline from June to August.

A declining exchange rate failed to offset the shock of rising oil prices. The average monthly USD/KRW exchange rate fell 3.4% from 1,406.30 won in August to 1,359.00 won in September. Over the same period, however, Dubai crude prices surged 28.1% from $88.75 to $113.71 per barrel.

Domestic production costs for energy-related items also saw sharp increases.

In September, the producer price index for coal and petroleum products jumped 53.6% year-on-year—roughly seven times the overall producer price inflation rate of 7.7%. On a monthly basis, it rose 0.9%, rebounding for the first time in five months.

By sub-item, jet fuel surged 71.7%, alongside sharp increases in naphtha (47.0%), kerosene (40.3%), diesel (37.1%), heavy oil (35.4%), and gasoline (24.8%).

Geopolitical Risks and Squeezed Global Inventories

Global crude prices have been on a steep upward trajectory due to heightened military tensions in the Middle East.

On the 23rd (local time), Brent crude jumped 3.8% intraday to $117.45 per barrel, hitting its highest level since April, with its closing price up 3.14% at $116.72. West Texas Intermediate (WTI) rose 3.8% to $103.27 per barrel, surpassing the $100 mark for the first time in over a month.

Markets are increasingly worried that military clashes between the U.S. and Iran could flare up around the November 3 U.S. midterm elections.

During a campaign rally in Florida on the 23rd, President Trump mentioned the possibility of war with Iran, stating, "We may carry out another small operation called 'Epic Fury'." Risks surrounding Middle Eastern oil transit routes are also mounting.

A decline in global oil inventories is compounding supply anxieties. According to the International Energy Agency (IEA) report released on the 14th, global observed oil inventories at the end of September dropped by 509 million barrels compared to late February, just before the conflict began.

In particular, land-based inventories plunged by 113 million barrels in September alone, bringing them close to their lowest levels since 2016.

Refined product supplies also remain constrained. According to the IEA, Middle Eastern exports of refined petroleum products plummeted by about 60%, falling from 4.7 million barrels per day before the conflict to 1.9 million barrels in September.

Outlook: A Threat of a 'Super Spike'?

Some analysts are warning of the possibility of further drastic surges.

On the 17th, Neil Dingman, an energy research analyst at William Blair, voiced agreement with the possibility of an oil price 'Super spike' mentioned by major energy company CEOs.

Dingman diagnosed that physical oil market conditions are tightening due to tanker attacks and record-high freight rates. He noted that the mid-cycle oil price range—previously viewed as $70 to $80 per barrel—has now shifted closer to $80 to $90, with periods expected above $100.

If international oil prices climb further, corporate fuel and raw material cost burdens will amplify. As accumulated production costs are passed on to consumers, the slowdown of year-end inflation could be delayed.

Experts predict that the future trajectory of oil prices will heavily depend on how the Middle East conflict unfolds.

Jang Tae-hwan, a senior researcher at the Korea Energy Economics Institute, noted: "If the U.S.-Iran crisis or the Russia-Ukraine conflict worsens, oil prices could rebound to very high levels, potentially reaching previous peaks."

He added, "If the current situation persists, the market may gradually stabilize, but due to global strategic reserve-securing demand and inventory shortages, the downside for oil prices is unlikely to open up significantly."

[ⓒ Global Economic Times. 무단전재-재배포 금지]