South Korea's energy diplomacy is ramping up again! Lee Jae-myung plans to attend the conference on the safety of navigation in the Strait of Hormuz.

South Korean President Lee Jae-myung is likely to participate in a European-led conference aimed at discussing the security of navigation in the Strait of Hormuz before his upcoming visits to India and Vietnam. A senior official from the South Korean presidential office stated that President Lee is "actively considering" participating in the virtual conference on the security of navigation in the Strait of Hormuz organized by France and the United Kingdom on April 17. The official added that President Lee may prepare a speech covering topics such as the energy supply chain, South Korea's position on the Middle East crisis, and the necessity of international coordination to ensure freedom of navigation. This diplomatic engagement comes as President Lee plans to begin a six-day visit to India and Vietnam on April 19. It is part of a broader effort by South Korea to strengthen alliances and economic partnerships amidst increasing global geopolitical uncertainties. In India, President Lee, upon Prime Minister Modi's invitation, will visit New Delhi from April 19 to 21. The visit is expected to include a summit covering cooperation in shipbuilding, finance, artificial intelligence, and defense fields, as well as discussions on coordinating the energy supply chain and the Middle East situation. President Lee will then proceed to meet with President Nguyen Xuan Phuc in Hanoi, Vietnam on April 22, with discussions expected to focus on nuclear power cooperation, critical minerals, and broader strategic relations. The conference is expected to take place on Friday evening Korean time, co-hosted by French President Macron and British Prime Minister Starmar, with about 70 to 80 countries and international organizations invited to participate. The conference aims to lay the foundation for the safe passage of this strategic waterway after hostilities are quelled. While the United States is not expected to participate in the conference, the South Korean official stated that this is not intended to exclude the United States, but rather considering its role as a direct party to the conflict. Furthermore, the South Korean government will push for bilateral negotiations to secure passage rights for the 26 ships currently stranded in the Strait of Hormuz. Currently, there are 26 South Korean vessels stranded near the Strait of Hormuz, including 130 South Korean citizens on South Korean vessels and 37 South Korean citizens on foreign vessels. According to the Korean Shipowners' Association, ships stranded in the strait for one day would incur losses of about $1.43 million due to fuel consumption and war insurance. President Lee's potential attendance will highlight South Korea's increasingly strong diplomatic efforts to align with like-minded countries in protecting energy pathways. For South Korea, which heavily relies on energy transported through the Strait of Hormuz, this is a critical issue. South Korea is highly dependent on energy imports, with about 70% of its oil and about 20% of its liquefied natural gas coming from the Middle East, most of which are transported through the Strait of Hormuz. Following military strikes by the United States and Israel on Iran at the end of February, maritime transportation in the Strait of Hormuz has been continuously disrupted, putting pressure on South Korea's energy supply. Gasoline and diesel prices have surged, and the supply of raw materials such as naphtha and urea has tightened, affecting the livelihoods of the people and the economy. The energy shock has forced the South Korean government to take increasingly tough measures, including setting a cap on fuel prices to protect the economy. Authorities also stated that they will formulate emergency plans to curb energy demand and stabilize prices. South Korean assets receive a "calming pill"! Energy diplomacy locks in 273 million barrels of crude oil to ensure supply around the Strait of Hormuz It is worth mentioning that on Wednesday, Kang Hoon-sik, the chief assistant to the South Korean president, stated that South Korea has secured 273 million barrels of crude oil and 2.1 million tons of naphtha from the Middle East and Kazakhstan until the end of the year. These energy supplies will be transported through alternative routes outside the Strait of Hormuz, unrelated to the closure of the Strait. In a press conference held after visiting Kazakhstan, Oman, Saudi Arabia, and Qatar, Kang Hoon-sik stated that the secured crude oil and naphtha will be transported through alternative supply routes that are not affected by the closure of the Strait of Hormuz, directly and specifically contributing to maintaining stability in domestic supply. He pointed out that, based on last year's usage, under normal conditions, the secured crude oil is enough to support the South Korean economy for more than three months, while the amount of naphtha is equivalent to about one month's import volume. In addition to addressing the current supply gap, South Korea is seeking to structurally reduce its reliance on the Strait of Hormuz. Kang Hoon-sik revealed that in discussions with Saudi Arabia and Oman, both parties have deeply explored cooperation on constructing bypass pipelines outside the Strait of Hormuz and oil storage facilities. Once the relevant infrastructure is in place, Persian Gulf crude oil can be directly transported to the Arabian Sea or the Red Sea coast through land pipelines, completely avoiding the risk of strait blockage. Furthermore, the South Korean government has allocated additional budget to expand domestic oil storage facilities. By deepening the "joint reserve" agreements with major oil-producing countries, South Korea hopes to attract Middle Eastern countries to store commercial inventories within South Korea's borders, earning storage income and enhancing priority use rights during emergencies. Kang Hoon-sik stated that with more funds allocated to expand domestic oil storage facilities, joint reserves with major oil-producing countries can be expanded, helping ensure a stable supply. South Korean financial markets have experienced severe fluctuations due to the repeated tensions in the Middle East. As a typical "high beta value, net oil-importing economy," continuous outflows of foreign capital have put pressure on the South Korean won, and the KOSPI index has experienced significant volatility. Analysts believe that the landing of the energy security agreement announced this week will directly bring positive effects. Firstly, the agreement will eliminate short-term supply risks. If the Strait of Hormuz were completely closed, South Korean refineries would face a shutdown risk within two weeks. The three-month buffer period now provides decisive time for subsequent diplomatic efforts. Secondly, it will curb input inflation. By locking in price formulas through government agreements, it will help hedge against high oil prices in the spot market due to war premiums, alleviating the inflation pressure faced by the South Korean central bank. Lastly, it will stabilize the stock market and exchange rate. The shortage logic of raw materials in the petrochemical and refining sectors is corrected, macroeconomic uncertainties in the technology manufacturing industry are reduced, and it is expected to attract foreign capital inflows and support the stability of the Korean won exchange rate. With signs of easing tensions in the Middle East and a series of moves by South Korean authorities to secure energy supply, South Korean assets are stabilizing. As of the time of writing, the USD/KRW exchange rate is at 1474.99, down more than 2% since the beginning of the month. Following a more than 19% drop in March, the KOSPI index has accumulated over 23% growth since the beginning of this month. BlackRock is "very bullish" on South Korean stocks, and local funds are returning to the market This week, the world's largest asset management company, BlackRock, upgraded its rating on US and emerging market stocks to "overweight," stating that both asset classes have profit potential. BlackRock mentioned that South Korean stocks were the key DRIVE behind its upgrade of emerging market ratings. BlackRock's global chief investment strategist Wei Li stated, "South Korea is a crucial reason for us to raise the emerging market rating. South Korea is at the core of the tech supply chain, showing strong growth momentum." She mentioned the strong demand for AI-related hardware in the market and explicitly stated, "We are very bullish on the South Korean stock market." The most tangible data supporting this viewpoint comes from the stunning surge in earnings expectations. Compiled data shows that the expected forward earnings growth rate of the South Korean benchmark KOSPI index was at 43% at the beginning of the year, and has now jumped to around 170%. Despite experiencing severe volatility due to the Middle East geopolitical conflict, the index is on the verge of recovering its previous declines, with a cumulative increase of 47% since 2026, outperforming most major stock indices globally. Regarding market concerns about the South Korean stock market being excessively concentrated on a few large chip stocks, Wei Li believes that this is a feature rather than a flaw during a technological transition period. She stated, "People see concentration in individual stocks as a risk, but in reality, during a period of technological change, this is a fundamental feature of the current market environment. We are not particularly concerned about this concentration issue at the moment." BlackRock's optimism has been echoed in the local fund market in South Korea. With the United States and Iran indicating willingness to renegotiate, market liquidity, which was frozen due to war panic, quickly thawed. Data from the Korean Financial Investment Association on the 16th showed that as of April 14, the balance of investors' margin accounts reached 117.6724 trillion Korean won, the highest level in three weeks, and has essentially returned to the level at the end of February before the outbreak of the US-Iran conflict. Investor margin accounts are often seen as "sideline funds" for the stock market, and the rapid expansion of its scale indicates significant restoration of investor confidence. It is noteworthy that since touching its lowest point after the start of this conflict on April 6, boosted by the news of a "two-week ceasefire," this indicator has surged by over 10 trillion Korean won in just 6 trading days. The signs of the stock market rebound quickly ignited the leveraged enthusiasm of South Korean retail investors. The data shows that as of the 14th, the balance of credit trading (funds borrowed for stock trading), has risen to 33.2824 trillion Korean won, with credit balance in the mainboard Kospi market alone reaching 23.406 trillion Korean won, setting a new historical high. Fund flows show that this round of credit expansion is highly concentrated in the semiconductor sector. Taking the industry leader Samsung Electronics as an example, its credit financing balance has reached 3.4126 trillion Korean won, an increase of 107% from the end of last year, and a 47% increase from before the conflict broke out. During the same period, SK Hynix's credit balance also increased by 30% to 2.2656 trillion Korean won. Market analysts believe that the better-than-expected performance of semiconductor giants is the core catalyst attracting high-risk preference funds. Despite facing supply chain concerns caused by the war, Samsung Electronics announced a quarterly operating profit of 57 trillion Korean won on the 7th, far exceeding market expectations, greatly restoring investor confidence in the fundamentals of technology stocks.