Financial and International Turbulence Triggered by the Israel-Iran War

Outbreak of the Middle East Crisis: Conflict between Israel and Iran

In June 2025, the Middle East came closer to the risk of full-scale war as Israel launched a major airstrike targeting Iran's nuclear facilities. This attack was named Operation Rising Lion and involved precise strikes on nuclear and missile infrastructure, including Natanz. It is reported that senior Iranian military officials and nuclear scientists were killed. Iran immediately declared retaliation, and the United States took precautions against the escalation by withdrawing its troops stationed in the region. This situation goes beyond a simple conflict between the two countries and is having a significant impact on international financial markets, diplomatic relations, and global security order.

Immediate Reaction of the Financial Markets: Spread of War Fear

As the armed conflict intensified, international financial markets reacted immediately. Brent crude oil prices surged by more than 6% in just one day, surpassing $93 per barrel, raising concerns about the global oil supply chain due to the potential blockade of the Strait of Hormuz. Asian countries, including South Korea and Japan, which are heavily reliant on Middle Eastern oil, faced rising energy costs. The global stock markets were also significantly shaken, with South Korea's KOSPI index dropping by more than 2%. In contrast, safe-haven assets like the dollar and gold attracted funds, while capital outflows began to be seen in emerging markets linked to the Middle East. This financial instability could also impact monetary policies in various countries, potentially leading to a reassessment of interest rate cut possibilities.

Reconfiguration of the Diplomatic Order: Formation of New Rifts

This conflict is creating new fissures in the international community. The United States is refraining from direct military intervention before the elections while maintaining its alliance with Israel. In contrast, Russia and China are strengthening their strategic ties with Iran and attempting to solidify the anti-American bloc. As a result, the likelihood of a new type of 'new Cold War' structure centered around the Middle East is increasing. Furthermore, concerns about Iran's potential nuclear armament are prompting discussions about nuclear development among other Middle Eastern powers such as Saudi Arabia and Turkey. The mediation power of international organizations is weakening, and the effectiveness of multilateral diplomacy has significantly decreased.

Response challenges of South Korea and neighboring countries: Efforts to overcome the crisis

Although South Korea is geographically distant from the Middle East, it is economically closely connected. As South Korea imports over 70% of its crude oil from the Middle East, it cannot avoid the pressures of rising import prices, increased manufacturing costs, and consumer contraction due to soaring oil prices. The domestic financial market, which has a high proportion of foreign investment, is also likely to react sensitively to geopolitical uncertainties. Accordingly, the South Korean government is activating its emergency response system and reviewing various measures. These include ensuring stable emergency supply chains, intervening in the foreign exchange market, and providing financial support to businesses. Diplomatic efforts should also focus on maintaining balanced relations and managing risks in the Middle Eastern region.

Conclusion: Finding Opportunities in Crisis

The conflict between Israel and Iran clearly demonstrates the impact of geopolitical risks on financial and real economies. The international situation is entering a new era of uncertainty, and the Middle East remains the most vulnerable link in the global order. However, opportunities exist even amidst the crisis. Countries must seek a new order through enhancing system resilience and strategic responses. South Korea should also prioritize 'economic security' as a core national strategy and establish a structure resilient to external shocks by diversifying energy imports and expanding diplomatic outreach. Geopolitical risks are an unavoidable reality, but effective responses depend on our choices and capabilities.