By Cho Hyung-kwon
Staff Reporter

Oil prices approached a new record of $45 per barrel in New York, pushing Korea’s import prices to their highest in 22 years and seven months and the nation’s terms of trade conditions to their worst level ever, the Bank of Korea (BOK) said Tuesday.

The West Texas Intermediate (WTI) crude oil for September delivery closed at $44.84 a barrel on the New York Mercantile Exchange, the highest close since oil futures were first traded in 1983. Prices rose to as high as $44.99 a barrel in after-hours electronic trading on Tuesday.

Uncertain outlook on Yukos, Russia’s largest oil producer and political uncertainties in Venezuela heightened concerns about slower oil production, a BOK economist said.

The BOK reported that the net barter terms of trade index, calculated by dividing the unit value of exports by that of imports was 84.8 in April, the lowest level ever since the central bank introduced the index in 1988.

The index declined from 88.5 in January last year to 86.2 in February and 85.8 in March.

The index, a barometer of trade profitability, shows how much a country can import based on 100 percent of its exports.

For instance, an index of 89 means that the nation can import 890 won worth of products in exchange for exporting 1,000 won worth of goods. A fall in the index signifies a decline in the real purchasing power.

The worsening trade conditions were mainly due to the rising oil prices, which triggered import prices to jump, while export prices remained virtually unchanged.

The average oil import price jumped to $36.11 a barrel in June, the highest since November of 1981, and has climbed for eight straight months since recording $27.69 a barrel in October last year.

The trade conditions are expected to worsen in the coming months as the terms of trade index lags behind oil prices by two to three months.

The Samsung Economic Research Institute said a rise of $2 a barrel in oil prices leads to a 2.6 point drop in the terms of trade index.

``If import prices continue to climb due to high oil prices and export prices decline, the trade conditions are expected to worsen even further. Especially, the uncertain outlook of the global information technology industry could lead to a decline in semiconductor and LCD prices, the main driver of Korean exports,’’ the BOK said.

kevincho@koreatimes.co.kr