As Iran brings out the blockade card for the Strait of Hormuz, the domestic construction industry could be greatly affected. The Strait of Hormuz is a route through which 20-30% of the world's oil and liquefied natural gas (LNG) transportation passes. The U.S. Donald Trump administration carried out airstrikes on three Iranian nuclear facilities, including Fordow, and the Iranian parliament has resolved to blockade the Strait of Hormuz. Actual implementation of the blockade must be decided by Iran's Supreme Leader Ayatollah Ali Khamenei.

If Iran blocks the Strait of Hormuz, oil exports from various Middle Eastern countries would be disrupted, leading to skyrocketing international oil prices that could also increase the prices of other raw materials. Additionally, there is a possibility that local projects could be delayed or halted due to instability in the Middle East, which accounts for nearly half of domestic construction companies' overseas orders.

On June 22, 2025, after the U.S. attacks the Fordow underground nuclear facility in Iran, a satellite image shows an overview of the complex /Courtesy of Yonhap News, Reuters

According to the construction industry and the Korea Overseas Constructors Association (KOCA) on the 23rd, the order volume for domestic construction companies in the Middle East this year is approximately $5.641742 billion (about 7.7895 trillion won). This accounts for 48.5% of the total overseas orders of $11.622476 billion (16.5 trillion won). Nearly half of the overseas orders are concentrated in the Middle East.

Looking at the current status of major construction companies in the Middle East, Hyundai E&C is working on a 'solar power-linked 380kV transmission line construction project' ordered by the Saudi Electricity Company (SEC), which faces Iran and the Persian Gulf. The transmission line project is being constructed in the Medina and Jeddah regions of Saudi Arabia, with a total construction cost of $389 million (about 512.5 billion won) that began in January. The goal is to complete it by November 2027.

In Iraq, which shares a border with Iran, Hanwha is developing a large-scale new town. The Bismayah new town construction project being undertaken by Hanwha aims to build a new town with 100,080 dwellings and social infrastructure in the Bismayah area, located 10 kilometers southeast of the capital Baghdad. Currently, construction has been completed on around 30,000 dwellings, and they are waiting for approval from the Iraqi government's Council of Ministers to begin construction on an additional 70,000 dwellings. Additionally, in the United Arab Emirates (UAE), a consortium of Samsung C&T and local construction firm Trojan General Contracting is building a gas-fired power plant with a capacity of 1,000 megawatts near Al Dhafra in Abu Dhabi.

Graphic=Jeong Seo-hee

The construction industry is anxious about how the extreme confrontation between Iran and the United States might affect domestic and foreign construction projects. In addition to the already real dangers like surging international oil prices and the sharp increase in the exchange rate of the Korean won against the dollar (a drop in the value of the won), there are concerns that construction projects currently underway in the Middle East may be temporarily halted.

Lee Eun-hyung, a researcher at the Korea Construction Policy Institute, said, "Most of the crude oil entering Korea is Dubai crude traded in the Middle East. If exports become difficult due to the blockade of the Strait of Hormuz, it could lead to soaring oil prices that would negatively impact not only construction but the entire domestic industry." Professor Yoon Seong-wook of Chungbuk National University also noted, "70-80% of the crude oil entering Korea is Dubai crude," adding, "The impact of rising oil prices on the industry is beyond imagination."

Kim Hyung-mi, head of the Asia-Middle East-Europe division at the Korea Overseas Construction Association, said, "If the blockade of the Strait of Hormuz actually happens, the worst-case scenario could unfold," noting, "Difficulties in logistics could lead to a halt in the ongoing projects in various Middle Eastern countries."

A construction company official said, "Although the impact on countries adjacent to Iran is currently not significant, there is a burden to monitor safety issues for local staff, the increase in raw material prices, including crude oil that must be procured locally for projects in the Middle East." Another construction company official stated, "No issues have yet occurred in projects in countries neighboring Iran," but added, "We are at a stage of closely watching how far the Iran situation will spread."

According to Bloomberg, the price of Brent crude futures at the London ICE exchange rose to more than 5% to $81.4 per barrel in the afternoon of the 22nd compared to the previous trading day and is currently recorded at $78.46. The West Texas Intermediate (WTI) at the New York Mercantile Exchange also surged more than 4%, soaring to $78.4 per barrel before currently trading at $75.31. The won-dollar exchange rate is recording at 1,382.3 won per dollar, an increase of 0.42% (5.8 won) from the previous trading day.