Imminent Russian invasion of Ukraine raises greater alarm for South Korea whose trade and inflation have already been bruised by spikes in energy and commodity prices, while Korean businesses in Eastern Europe could be damaged by the regional tensions.

Russia is a major crude oil producer and the world`s largest natural gas exporter. Global oil prices already have topped $90 per barrel to record seven-year high on rising geopolitical risk, with some projecting the price to hit $120 if Russia invades its neighbor.

Hike in oil and gas prices will translate into higher costs for Korean consumers and firms.

Korean oil refiners would benefit in the short term from inventory related gains but they also face the risk of fall in demand from soaring oil prices.

Both Russia and Ukraine are also the world’s major exporters of grain, including wheat and corn. War between the two countries would cut global supplies and drive up global prices of grain and related food products.

In addition to increase in materials cost, Korean firms could suffer direct impact from Russia-Ukraine conflict.

Samsung Electronics operates TV factory near Moscow. LG Electronics produces TV and home appliances also near Russia’s capital city. Hyundai Motor runs car assembly lines in St. Petersburg.

In Ukraine, Samsung Electronics and LG Electronics have regional office in Kiev, the capital city.

Korean firms reportedly have brought expats and their families back to Korea from Ukraine while preparing with emergency plans.

The Korean companies worry negative impact on the global economy from tensions in the region that could lead to possible shutdown of factories.

Global supply bottleneck could worsen if U.S. and Europe impose sanctions against Russia.

Korea already has been bearing the burn from soaring global oil prices. The country recorded trade deficit of $4.89 billion in January as imports value topped exports.

Korean government has been holding emergency response meeting on Russia-Ukraine crisis and global oil market together with industry players since last month.
Source: Pulse