OIL PRICE SPIKE DRAGS S. KOREA'S TRADE DEFICIT DOWN

 SEOUL, May 26 Asia Pulse - South Korea is expected to continue its trade deficit from last year due to recent steep hikes in international oil prices, according to government officials on Sunday.

The price of Dubai crude oil, South Korea's benchmark, finished up US$5.28 at $128.97 per barrel on Thursday, almost double the price a year earlier. The previous day, the West Texas Intermediate surged to a record high of $133.17 per barrel in New York.

South Korea's trade balance, which recorded a net loss of $865 million for the first time in December, tumbled to $3.89 billion in January.

Although exact figures vary, the country's net trade figure has been in the red in recent months. The country is poised to record a trade deficit in May for the sixth straight month, with the trade balance recording a net loss of $10.6 billion in the first 20 days.

The lingering deficit is attributed largely to the recent surge in oil prices. South Korea, which relies entirely on imports for its oil, is the world's fifth-largest oil importer.

Government officials forecast oil prices to increase an additional $10 per barrel by the end of May.

Despite exports to the Middle East enjoying an annual 40-percent increase in the January-April to $8.3 billion, imports from the region -- largely oil-related products -- have surged by 64.8 percent, amounting to $31.8 billion.

South Korea's trade balance with the Middle East soared 76.1 percent on-year in the first four months of the year to $23.5 billion.

"Strong exports succeeded in reducing the trade deficit in April, but trade balance woes are expected to be exacerbated by an increased burden in oil prices," said an official at the Ministry of Knowledge Economy.