S. Korean finance minister warns of heightened volatility in global energy markets

South Korean acting Finance Minister Lee Hyoung-il warned on Monday of increased volatility in global financial and energy markets due to escalating tensions in the Middle East following recent US military involvement.

"Following the United States' airstrikes, Iran's parliament passed a motion to close the Strait of Hormuz, highlighting the significant uncertainty surrounding the situation," Lee was quoted by the Yonhap News Agency as saying during a meeting on macroeconomic trends and risks.

The US launched air strikes on Iranian nuclear sites on June 21, with US President Donald Trump saying that Iran's key nuclear enrichment facilities were "completely and totally obliterated".

Noting that global oil prices had already risen by 2 to 3 percent on Monday, Lee said it signals increased volatility in international energy markets.

According to a news release issued by the Ministry of Economy and Finance after the meeting, Lee said related agencies need to closely monitor and respond to international energy prices and supply-demand conditions with special caution.

Despite challenging tax revenue conditions, the government has decided to extend the fuel tax reduction for two months until the end of August, Lee said.

"We will thoroughly monitor and prevent any illegal practices that take advantage of rising oil prices through the pan-governmental petroleum market inspection team, while ensuring domestic fuel prices do not rise excessively," he said.

He added that the government will also check market trends and implement necessary measures in time in case of excessive volatility in the financial market.

Given the high uncertainty moving forward, the ministry said a joint emergency response team across relevant agencies has been established to conduct 24-hour monitoring of developments in the Middle East.

"The team stands ready to implement contingency plans and respond swiftly to any emerging risks through close interagency coordination," it said.

The benchmark Korea Composite Stock Price Index dropped 15.87 points, or 0.53 percent, as of 11:20am local time on Monday morning.

While, the Korean won was trading at 1380.7 against the US dollar, a 15.1 won decrease from the previous session, according to statistics from Yonhap.