Oil Prices Soar After Saudi Attack… BOK Resumes Gold Purchases

This incident is anticipated to cause global crude oil supply to fall to its lowest level in 30 years.

Diesel prices are skyrocketing due to rising oil prices following the Saudi pipeline attack. Diesel has a broader application range than gasoline, potentially leading to increased costs for all industrial goods. This surge in diesel prices is a major factor contributing to the rise in China's Producer Price Index (PPI).

Rising oil prices are expected to accelerate the trend of choosing electric vehicles over internal combustion engine cars when purchasing a vehicle. Analysts suggest that consumers will opt for EVs even if they are 10 to 20 million won more expensive. However, with China dominating about 65% of the global EV supply, there is a possibility of EV shortages for non-Chinese manufacturers in Europe and the United States.

The US Federal Reserve (Fed) is currently considering raising interest rates due to inflation figures, but it is concerned that an interest rate hike would severely impact vulnerable economic sectors. Economist Mark Zandi argues that the Fed should be cautious about raising rates, stating that the current situation presents a significant dilemma for the Fed.

One reason why bond market interest rates remain low is the forecast of a surge in future US Treasury issuance. The current outstanding US T-bill volume stands at $7 trillion, and $6 trillion worth of Treasury bonds are set to mature next year. If interest rates are raised, the US government's interest expenses would sharply increase, significantly raising its fiscal burden.

Stablecoins have the advantage of being easily adopted due to lower remittance costs and payment convenience. Stablecoin issuers tend to hold short-term US Treasury bonds to maintain their dollar peg. Increased use of stablecoins could boost demand for short-term US Treasury bonds, which could put downward pressure on long-term interest rates.

The US Republican Party has unveiled an amendment to the Clarity Act, which aims to establish clear blockchain regulations and include conflict-of-interest provisions. The original bill failed to pass due to ethical clauses, but this amendment includes provisions prohibiting high-ranking public officials from issuing or sponsoring digital assets.

This move is interpreted as joining the trend of global central banks buying gold to prepare for currency instability.

A 22% tax rate will be applied to virtual asset income starting next year, affecting approximately 13.26 million individuals. Strong opposition is emerging, especially among younger generations. Consequently, there are calls for a rational taxation scheme that allows for the aggregation of profits and losses for tax purposes.

As the artificial intelligence (AI) industry expands, power consumption is surging, making power supply a global challenge. China predicts that AI token consumption will increase 350-fold by 2030 and has established a dedicated organization for power in AI environments to cope with high power consumption. Korea faces challenges with transmission and distribution for providing power to semiconductor complexes.

Korea faces a severe problem of insufficient transmission and distribution infrastructure rather than power generation capacity. Samsung Electronics and SK Hynix have rejected KEPCO's upfront electricity payment proposal, and the construction of substations and transmission lines is difficult due to issues of resident acceptance. This poses a significant obstacle to large-scale projects like the Yongin Semiconductor Cluster.