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Historic Oil Crash to Further Hurt Korea's Exports, Key Industries

Plummeting oil prices are putting immense pressure on the country's exports and key industries. HappyMidnight/Wikimedia

South Korea's exports and its key industries are expected to face more hurdles due to the plummeting oil prices as a result of oversupply caused by the outbreak.

Within hours, the price of US crude oil dipped from $18 a barrel to minus $38 early Tuesday, with oil producers running out of storage space.

It went up to above $1 by around noon.

Gas prices across South Korea were sold at an average price of 1,113.7 per liter, which was 3.6 percent less from the previous day.

The price was nearly 20 percent down from the start of the year and expected to decline further.

Low oil prices often lead to a decline in export value, resulting to an overall decrease in exports.

Korea is already experiencing a decline in its exports of petrochemicals and petroleum products.

Analysts expect major oil refiners such as SK Innovation and S-Oil to go into negative terrain this quarter up to the next.

According to the Korea Customs Service, the country's outbound shipments from April 1 to 20 dipped 26.9 percent on-year to $21.7 billion.

The decline was greatly felt by exporters of petroleum products, which went down 53.5 percent.

Meanwhile, exports of auto parts and automobiles were also greatly affected, down by 49.8 and 28.5 percent, respectively.

Exports to the United States and China dropped by around 17 percent.

The central bank attributed the decline in on-month export prices in March to the price cuts of petroleum, chemical, and coal products.

The Bank of Korea noted that it was the 10th consecutive month of decline on-year.

Low oil prices are also expected to diminish construction orders from the Middle East, creating more setbacks to the country's construction firms.

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