World Unrest Sends Oil Prices Soaring

Dubai crude, which makes up the largest part of Korea’s crude imports, hit the $70 a barrel mark.

With Western Texas Intermediate (WTI) and Brent Crude setting new record prices, the prices of the three major crude oil types are soaring.

Korea’s stock market plunged yesterday, dropping the KOSPI Index almost 30 points on concerns over oil price hike.

The Korea National Oil Corporation (KNOC) said that the spot price of Dubai crude on July 13 crossed the $70 mark for the first time at $70.39 a barrel, a $1.49 increase from the previous day. Dubai crude represents 80 percent of Korea’s crude imports.

The WTI price for August delivery went up $1.75(2.3 percent) on July 13, with $76.70 at the market closing at the New York Mercantile Exchange (NYMEX). It is the first time the WTI price has exceeded $76 since 1983, when transactions of crude futures began at the NYMEX.

The price of Brent crude for August delivery also reached a historic high of $76.69 that day at the closing bell at the International Petroleum Exchange in central London.

The KNOC explained that the oil price skyrocketed due to multiple geopolitical headaches, including Israel’s offensive against Lebanon, Iran’s nuclear problem discussed at the UN Security Council, North Korea’s refusal to return to the six-party talks and the destruction of oil pipes by Nigerian militant forces.

The KOSPI Index was at 1,255.13 yesterday, 29.89-points or 2.3 percent down from the day before, at the closing bell. The KOSDAQ Index also declined by 11.45 points or 2.0 percent to 559.66, dropping under the 560 mark in three weeks.

Hyun-Jin Park TK Sohn witness@donga.com sohn@donga.com