Seoul: South Korea's manufacturing sector is expected to face significantly increased cost burdens as the Middle Eastern crisis continues to push up global energy prices, a report showed Monday.

According to Yonhap News Agency, the Korea Institute for Industrial Economics and Trade (KIET), a state-run think tank, reported that a 10 percent rise in international crude prices leads to a 0.71 percent increase in the average production cost for South Korean manufacturers. The report specifically highlights the petrochemical industry's production costs, which are likely to rise by 6.3 percent, while chemical products could see a 1.59 percent increase. Additionally, the costs for rubber and plastic products are anticipated to grow by 0.46 percent.

The KIET noted that Dubai crude prices, the benchmark for Middle Eastern oil, have surged by over 40 percent following U.S. and Israeli airstrikes against Iran late last month. South Korea is particularly vulnerable as it imports approximately 70 percent of its crude oil from the Middle East.

While the Middle East accounts for only around 2-3 percent of South Korea's total exports, the KIET cautions that Seoul's exports may face indirect impacts such as increased shipping costs, disruptions in supply chains, and a possible global economic downturn.

Hong Sung-wook, a senior researcher at KIET, stated, "Oil prices have a heavy impact on consumer prices," emphasizing the necessity for market price stabilization policies in both the short and long term. In response, the South Korean government introduced a fuel price cap system last week to set maximum prices for fuel products supplied by oil refineries to gas stations.