KIEP forecasts that oil prices could rise into a range of $90–$174, and warns that a prolonged Middle East conflict makes a sustained drop in prices unlikely. The institute’s analysis highlights that direct damage to energy infrastructure would push prices toward the upper bound, creating urgent supply challenges for regional markets.

KIEP forecast and scenario analysis

The Korea Institute for International Economic Policy examined three scenarios tied to the current Middle East war and concluded that downward pressure on crude oil is difficult to achieve under the most plausible outcomes. The report frames the $90–$174 band as conditional: the lower end corresponds to constrained but functioning supplies, while the report estimates a practical lower bound near $174 if key energy facilities are struck and taken offline. These findings were summarized in Chosun’s English coverage and the KIEP official release published on 2026-04-02.

Naphtha dependence and reconstruction timeline

KIEP calls particular attention to petrochemical feedstock vulnerability: naphtha (나프타) is reported to have a 34.4% dependence on Middle East supplies. That concentration implies that even when crude flows resume, rebuilding refining and logistics capacity could take multiple years; the report estimates a 3–5 year recovery window for disrupted naphtha supply chains. For downstream industries that rely on steady naphtha deliveries, this degree of exposure raises the risk of sustained price volatility and production bottlenecks.

Recommended emergency measures and policy implications

To mitigate these risks, the report recommends coordinated strategic stock releases linked to the IEA framework and urges sourcing alternatives from the United States and suppliers in Southeast Asia. KIEP notes that past episodes of supply disruption contributed to a rise in headline inflation—available comparisons indicate an increase of roughly 0.12 percentage points in inflation in similar circumstances—underlining the need for urgent emergency supply and demand-management measures. Policymakers are urged to combine short-term reserve deployments with longer-term diversification of energy suppliers.

The policy message is clear: the combination of geopolitical risk, concentrated naphtha dependence, and the potential for physical damage to energy facilities creates a scenario where oil prices can move sharply higher and stay there. Businesses and governments should prepare for that possibility through contingency contracts, stockpile strategies, and diplomatic engagement to expand alternative supply routes. The KIEP assessment, as reported by Chosun on 2026-04-02, frames these steps as necessary to limit economic spillovers from prolonged energy-market disruption.