SEOUL, April 29 (AJP) - The conflict in the Middle East conflict that began with U.S.-led airstrikes on Iran in late February, has dragged on for nearly two months with no end in sight, pushing global oil prices higher and intensifying economic pressures worldwide.
South Korea relies on the Strait of Hormuz for more than 70 percent of its crude oil imports, making the ongoing conflict a direct threat to its energy security. Seoul has joined a multinational effort, spearheaded by the U.K. and France this month, to protect shipping lanes through the strait, including the formation of a joint defensive force. However, the benefits of that cooperation, along with moves to diversify oil imports, are unlikely to be felt immediately.
The crisis is also taking a toll on North Korea. Rising oil prices not only increase energy costs but also boost demand for dollars, putting pressure on the currency, widening the trade deficit, and fueling stagflation.
Data from online news outlet Daily NK shows the North Korean won has lost roughly half its value against the dollar in just a few months. In cities like Pyongyang, Sinuiju, and Hyesan, the exchange rate has surged from around 35,000 won per dollar in early February to nearly 70,000 this week. The currency had remained relatively stable in the 30,000 range from July last year through early February, suggesting the Middle East crisis has had a direct impact on the won.
The won's slide may have been worsened by the regime printing more currency through the central bank rather than curbing dollar usage. But after years under sanctions, North Korea has learned that such measures often backfire, weakening the currency without ensuring a stable supply of goods. North Korea's fresh economic crisis is now forcing it to rethink its survival strategy, which had briefly eased as it strengthened military ties with Russia while supporting its war in Ukraine.
One immediate impact is a sharp rise in fuel costs and transport fees. Because UN Security Council resolutions cap North Korea's annual imports of refined petroleum at 500,000 barrels, the country is forced to rely on unofficial channels such as ship-to-ship transfers in international waters. With global oil prices rising, higher logistics costs for smuggling networks are adding further pressure, pushing domestic fuel prices up far faster than international benchmark prices.
According to Daily NK and Japan's Asia Press International, gasoline prices in North Korea in mid-April stood at about 23,000 won per kilogram, while diesel prices were around 18,500 won, both up more than 40 percent since the start of this year.
These figures are about 1.5 to two times the swing in global oil prices, reflecting scarcity. There were reports that freight charges for vehicles to inland areas such as Sinuiju nearly doubled in about a month, as authorities restricted fuel for private consumption to prioritize military strategic reserves.
Another impact has been a rise in foreign-currency hoarding driven by market uncertainty. Shortly after the Middle East conflict began, North Korean state media condemned the U.S. and Israel, leading North Koreans to interpret it as a warning to prepare for harder times.
Many may recall the country's currency reform in late 2009, when trust in the won collapsed and triggered a rush into perceived assets such as U.S. dollars, Chinese yuan, and gold. The trend has been even more pronounced among North Korea's elite and emerging wealthy class. Merchants also increasingly avoid using the won, with weaker consumption reducing their liquidity, and the livelihood economy has deteriorated sharply, showing signs of a prolonged slowdown.
The fallout also extends beyond energy and exchange rates. As the won continues to slide amid a shortage of hard currency, North Korea has ramped up illicit cyber operations to plug the gap, intensifying cybercrime that has long served as a financial lifeline for the regime.
According to a 2026 report by blockchain analytics firm Chainalysis, North Korea-linked hacking groups stole about US$2.02 billion in cryptocurrency in 2025, roughly 4.6 times the country's annual exports.
The stolen assets are laundered through intermediaries and shell exchanges in Southeast Asia to hide the transaction trail, then used to bypass sanctions, financing fuel smuggling and the procurement of advanced weapons components from Russia. Ironically, the Middle East crisis is pushing North Korea further toward illegal means, creating a cycle that directly feeds into funding for its nuclear and missile programs.
In the meantime, deeper economic dependence on China and Russia is narrowing North Korea's diplomatic options. China, North Korea's traditional alley, has repeatedly provided calibrated, managed support during exchange-rate spikes to prevent instability from spreading into broader regime risk.
At the same time, North Korea's growing economic dependence on China and Russia is leaving it with fewer options. China, its traditional ally, has stepped in during past currency crises with various forms of support to prevent instability from spiraling into a broader crisis.
If the Middle East crisis drags on further, North Korea's economic burden is likely to fall not only on China but also on Russia, to which it owes support for troop deployments in Kursk and supplies of ammunition and other resources. Without Chinese and Russian backing, it would be difficult for North Korea to achieve its ambitious goal of building 20 industrial facilities annually over the next 10 years in its rural and provincial areas.
Russia is said to be investing $11 million this year in an oil exploration project along North Korea's east coast, a move that would deepen Pyongyang's economic dependence on Moscow and further skew an already asymmetric diplomatic relationship.
In short, the Middle East crisis is squeezing North Korea's economy through rising oil prices and higher costs amid a sharply weakening won. Whatever military gains Pyongyang has made through its deepening partnership with Russia, an exchange rate of 70,000 won to the dollar is a clear sign that its economy is in trouble.
North Korea's reliance on cybercrime and other illicit activities for its survival is likely to grow amid its deepening reliance on China and Russia. That is why the Middle East crisis may be more painful for the Korean Peninsula than for any other region.
South Korea relies on the Strait of Hormuz for more than 70 percent of its crude oil imports, making the ongoing conflict a direct threat to its energy security. Seoul has joined a multinational effort, spearheaded by the U.K. and France this month, to protect shipping lanes through the strait, including the formation of a joint defensive force. However, the benefits of that cooperation, along with moves to diversify oil imports, are unlikely to be felt immediately.
The crisis is also taking a toll on North Korea. Rising oil prices not only increase energy costs but also boost demand for dollars, putting pressure on the currency, widening the trade deficit, and fueling stagflation.
Data from online news outlet Daily NK shows the North Korean won has lost roughly half its value against the dollar in just a few months. In cities like Pyongyang, Sinuiju, and Hyesan, the exchange rate has surged from around 35,000 won per dollar in early February to nearly 70,000 this week. The currency had remained relatively stable in the 30,000 range from July last year through early February, suggesting the Middle East crisis has had a direct impact on the won.
The won's slide may have been worsened by the regime printing more currency through the central bank rather than curbing dollar usage. But after years under sanctions, North Korea has learned that such measures often backfire, weakening the currency without ensuring a stable supply of goods. North Korea's fresh economic crisis is now forcing it to rethink its survival strategy, which had briefly eased as it strengthened military ties with Russia while supporting its war in Ukraine.
One immediate impact is a sharp rise in fuel costs and transport fees. Because UN Security Council resolutions cap North Korea's annual imports of refined petroleum at 500,000 barrels, the country is forced to rely on unofficial channels such as ship-to-ship transfers in international waters. With global oil prices rising, higher logistics costs for smuggling networks are adding further pressure, pushing domestic fuel prices up far faster than international benchmark prices.
According to Daily NK and Japan's Asia Press International, gasoline prices in North Korea in mid-April stood at about 23,000 won per kilogram, while diesel prices were around 18,500 won, both up more than 40 percent since the start of this year.
These figures are about 1.5 to two times the swing in global oil prices, reflecting scarcity. There were reports that freight charges for vehicles to inland areas such as Sinuiju nearly doubled in about a month, as authorities restricted fuel for private consumption to prioritize military strategic reserves.
Another impact has been a rise in foreign-currency hoarding driven by market uncertainty. Shortly after the Middle East conflict began, North Korean state media condemned the U.S. and Israel, leading North Koreans to interpret it as a warning to prepare for harder times.
Many may recall the country's currency reform in late 2009, when trust in the won collapsed and triggered a rush into perceived assets such as U.S. dollars, Chinese yuan, and gold. The trend has been even more pronounced among North Korea's elite and emerging wealthy class. Merchants also increasingly avoid using the won, with weaker consumption reducing their liquidity, and the livelihood economy has deteriorated sharply, showing signs of a prolonged slowdown.
The fallout also extends beyond energy and exchange rates. As the won continues to slide amid a shortage of hard currency, North Korea has ramped up illicit cyber operations to plug the gap, intensifying cybercrime that has long served as a financial lifeline for the regime.
According to a 2026 report by blockchain analytics firm Chainalysis, North Korea-linked hacking groups stole about US$2.02 billion in cryptocurrency in 2025, roughly 4.6 times the country's annual exports.
The stolen assets are laundered through intermediaries and shell exchanges in Southeast Asia to hide the transaction trail, then used to bypass sanctions, financing fuel smuggling and the procurement of advanced weapons components from Russia. Ironically, the Middle East crisis is pushing North Korea further toward illegal means, creating a cycle that directly feeds into funding for its nuclear and missile programs.
In the meantime, deeper economic dependence on China and Russia is narrowing North Korea's diplomatic options. China, North Korea's traditional alley, has repeatedly provided calibrated, managed support during exchange-rate spikes to prevent instability from spreading into broader regime risk.
At the same time, North Korea's growing economic dependence on China and Russia is leaving it with fewer options. China, its traditional ally, has stepped in during past currency crises with various forms of support to prevent instability from spiraling into a broader crisis.
If the Middle East crisis drags on further, North Korea's economic burden is likely to fall not only on China but also on Russia, to which it owes support for troop deployments in Kursk and supplies of ammunition and other resources. Without Chinese and Russian backing, it would be difficult for North Korea to achieve its ambitious goal of building 20 industrial facilities annually over the next 10 years in its rural and provincial areas.
Russia is said to be investing $11 million this year in an oil exploration project along North Korea's east coast, a move that would deepen Pyongyang's economic dependence on Moscow and further skew an already asymmetric diplomatic relationship.
In short, the Middle East crisis is squeezing North Korea's economy through rising oil prices and higher costs amid a sharply weakening won. Whatever military gains Pyongyang has made through its deepening partnership with Russia, an exchange rate of 70,000 won to the dollar is a clear sign that its economy is in trouble.
North Korea's reliance on cybercrime and other illicit activities for its survival is likely to grow amid its deepening reliance on China and Russia. That is why the Middle East crisis may be more painful for the Korean Peninsula than for any other region.
Han Ki-ho, a professor at Ajou University's Institute for Unification Studies
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