"Stable Oil Prices, Normalized Sea Logistics Expected" Industry Relieved [U.S.-Iran End of War]

As news spread that the Strait of Hormuz would reopen following the U.S.-Iran peace deal, industry players are expecting positive effects from more stable global oil prices and a normalized logistics network.
The Strait of Hormuz is a strategic chokepoint through which 20% of the world's seaborne crude oil passes. However, even after the end of the war, it will not be easy for logistics, including oil shipments through the strait, to return to normal immediately. Additional time is likely to be needed, so it may take a while before the real impact is felt in industrial settings.
■Time needed before effects reach industry
According to industry sources on the 15th, the aviation sector is seen as a major beneficiary of lower oil prices because fuel costs account for a large share of its expenses.
Since fuel costs make up the largest portion of an airline's operating expenses, concerns over a blockade of the Strait of Hormuz have eased. If crude supply chains normalize, the burden of fuel costs could fall sharply. Lower fuel surcharges would also ease airfare pressure and help support a recovery in travel demand.
An industry official said, "If supply chain risks such as the reopening of the Strait of Hormuz are resolved and global oil prices stabilize, the burden of fuel costs, which account for about 30% of airlines' operating expenses, will ease and profitability will improve." The official added, "As exchange rates that had surged on war fears stabilize, passenger demand should recover and foreign-currency costs for airlines, including aircraft lease payments and fuel expenses, will also become less burdensome."
The refining industry said it needs to watch developments a little longer, as the outcome will depend on actual traffic conditions through the Strait of Hormuz and the direction of the crude oil and petroleum product markets after the war. In the medium to long term, if traffic through the strait fully normalizes, domestic refiners are expected to resume importing contracted crude from the Middle East, easing pressure on crude supply.
However, if the reopening of the Strait of Hormuz causes global oil prices and international petroleum product prices to plunge, domestic refiners are likely to face negative earnings effects from lagging costs, as crude purchased during the war period from March to May is reflected in production costs, as well as inventory valuation losses.
The petrochemical industry expects short-term benefits from a more stable supply of raw materials, but concerns are emerging that supply gluts from China could widen again over the long term.
That is because if imports of Iranian crude normalize, Chinese petrochemical companies are likely to increase production.
An industry official said, "Stability in the Middle East is positive, but there is also a possibility that the issue of oversupply from China will come back into focus." The official added, "We need to closely monitor market conditions."
■Recovery in Middle East demand for home appliances and mobile phones expected
Meanwhile, expectations that the situation in the Middle East will stabilize are leading forecasts that demand for home appliances and mobile phones will show some recovery.
Resource-rich countries such as the United Arab Emirates (UAE) and Saudi Arabia are major markets for premium home appliances and IT devices. Samsung Electronics Co., Ltd. (SEC) and LG Electronics have led the premium market in the region.
With tensions easing, sales of mobile phones and home appliances are expected to gain further momentum. In the case of LG Electronics, direct revenue exposure from the Middle East war was estimated at about 4% to 6%, so some recovery in sales is expected if the situation stabilizes.
There is also a view that global oil prices, sea freight rates, raw material prices, and exchange rates, all of which have been pressuring manufacturing costs, may take time to return to prewar levels.
A domestic home appliance industry official said, "Since ports and major energy facilities in the Middle East were hit during the war, it will inevitably take time for logistics and oil prices to normalize, so we are watching how the situation develops."
Samsung Electronics will hold a three-day global strategy meeting starting on the 16th to discuss its second-half strategy, focusing on the postwar situation in the Middle East, sales, investment, and cost management. The company is expected to concentrate on marketing and profitability for new products such as the Samsung Galaxy Z Fold and Samsung Galaxy Z Flip, which are set to launch in the second half, as well as measures to expand sales in the home appliance segment.
According to Counterpoint Research, smartphone shipments in the Middle East and Africa fell by about 7% in the first quarter of this year from a year earlier, due to instability in the Middle East. Even so, shipments of Samsung Galaxy smartphones rose 19% year on year in the same period. Market share also expanded by 4 percentage points, from 23% in the same period last year to 27% in the first quarter of this year. The semiconductor industry also noted the possibility of smoother equipment transportation and lower logistics and power costs.
[email protected] Park Shinyoung, Cho Eunhyo, Kang Gugui Reporter